Mexican restaurant chain Las Iguanas in the United Kingdom faces a possible bankruptcy process that could put dozens of restaurants at risk of closure. According to the National Restaurant Association, food and labor expenses have climbed sharply since the COVID-19 pandemic. Chad Moutray, chief economist at the National Restaurant Association, told Scripps News that restaurant operators have seen labor and food costs rise by 35% since the pandemic.
“Well, we’ve seen overall labor and food costs go up 35% since the pandemic,” Moutray said. “But it’s not just those costs. We’ve seen insurance and taxes and everything else go up, utility costs, et cetera,” he added. “Those extra costs have really eaten into the bottom line,” he said.
Restaurant owners traditionally raised menu prices to offset higher expenses. But industry groups now say that strategy no longer works because customers have become more cautious with spending.
A 2026 report from the James Beard Foundation found that restaurants that increased prices by more than 10% were more likely to lose customers and record weaker profits.
Anne McBride, vice president of impact at the James Beard Foundation, said many restaurant operators believe they have reached the limit of what customers can afford, reported The Street. “Chefs and operators feel that they can no longer pass on any additional increasing costs to their customers. We really hit a spot where consumers, diners, cannot pay any more at restaurants than they already are,” McBride said.
Why is Las Iguanas struggling to survive?
Industry experts say restaurants now face multiple financial pressures simultaneously. Inflation has raised food prices. Energy and utility bills remain high. Wage costs continue to rise. Insurance expenses and taxes have also increased.
At the same time, customers spend less on dining out because household budgets remain tight after years of inflation. Many families now cut back on restaurant visits to save money, reported The Street.
The casual dining sector in the United Kingdom has suffered heavily from these conditions. Several chains have shut locations, reduced staff, or entered restructuring talks over the past year.
Las Iguanas has become one of the latest restaurant operators caught in the crisis. Iguanas Holdings Limited, which operates 47 Las Iguanas restaurants across the United Kingdom, entered financial difficulties and asked creditors to support a restructuring plan through the UK High Court process, according to Swindon advisor.
The legal process aims to help the company avoid administration, which is similar to bankruptcy protection in the United States. If the restructuring fails, the company could run out of funding and move toward administration.
Court documents reported by the Yorkshire Post showed that Justice Hildyard approved the company’s request to hold creditor meetings on May 28. Creditors will vote on the restructuring proposal before the plan returns to court for final approval on June 5.
Las Iguanas operates under The Big Table Group, which has funded the chain’s losses. However, the parent company no longer wants to continue covering those losses indefinitely. That has increased fears that liquidation could become possible if creditors reject the rescue plan.
Business Sale reported that the company is using a Part 26A restructuring plan, a formal UK legal process designed to help struggling businesses avoid collapse.
Ryan Perkins, a lawyer representing the restaurant chain, told the court that Britain’s casual dining sector had faced “substantial problems” in recent years because of inflation, weaker customer spending, and higher taxes.
Perkins said Iguanas Holdings and Big Table Group had “done their best to meet these problems by improving the Las Iguanas menu and customer experience, amongst other things,” but added that trading conditions “remain very challenging.”
Can the restaurant industry recover?
Analysts say recovery may depend on lower inflation, stronger consumer confidence, and reduced operating costs. But many restaurant operators fear conditions may remain difficult for months.
The number of restaurant insolvencies in the United Kingdom rose 46% over the last year, according to figures from the Insolvency Service.
Audit firm Mazars said inflation and weaker consumer spending remained the biggest reasons behind the increase in restaurant failures. “A lot of restaurants are beset with challenges well outside their control. Many are struggling to keep their heads above water,” Paul Maloney, associate director at Mazars, told City AM.
Industry groups say independent restaurants face even greater risks because many smaller businesses lack the financial support available to larger chains.
Restaurant owners now try to reduce costs without driving customers away. Many operators have simplified menus, reduced opening hours, renegotiated supplier contracts, and cut expansion plans. Some chains have also closed underperforming locations to protect stronger restaurants, reported AOL.
Still, experts warn that more closures could happen if inflation remains high and consumer spending stays weak.