HIGH street restaurant chains are facing multiple sharp cost rises in rents, business rates, ingredients and wages while already struggling in an oversaturated market.

My warning comes after Italian restaurant chain Prezzo is to close 100 venues in an attempt to rescue the business.

We are increasingly witnessing market saturation, with the public’s disposable income just not increasing at a commensurate rate to match the number of eateries that have opened in the recent past.

In addition to this, many restaurant chains are also facing sharp costs rises in the areas of rent, rates, wages and ingredients.

In some cases, landlords have offered “rent-free periods” for new venues – typically out-of-town shopping centres – which while initially attractive can easily create a “false” profit position in the short-term followed by a sudden cash-flow drain when those periods expire, and rent must be paid.

On top of this, rateable values are soaring depending on where the venues are based in the UK, with the impact in London potentially resulting in rises of as much as 400 per cent.

Food inflation also means that the price of sourcing ingredients has increased, which places an increased burden on margins.

Meanwhile, restaurants typically employ people on hourly wages based on the minimum wage, which is due to rise from £7.50 to £7.83 per hour in April.

But they are also facing growing pressures to apply a National Living Wage which is £8.75 across the UK.

Carl Jackson is managing partner of Quantuma business advisers