‘Significant doubt’ hangs over the future of Burger and Lobster according to financial reports out today.

The restaurant chain, which opened a flashy 170-cover Manchester site in the Grade II-listed Ship Canal House on King Street in 2015, is struggling to pay back debts after racking up a pre-tax loss of more than £7m, according to accounts filed with Companies House.

The rising cost of lobster meat has also added pressure on the chain, hampered by its £20 fixed price policy and the cost of opening new sites.

The chain has already sold off its loss-making 300-seat Cardiff site, which shut last summer, and its Manchester site was also put up for sale last year.

A directors’ report reveals ‘a number of additional underperforming sites will be disposed of’ this year but does not identify which.

Dan Strauss, operations director for the group, admitted the company had been 'naive' to pursue such an ambitious expansion but said it was still committed to Manchester, where it is actively looking for smaller premises.

"It's a shame that we opened such a big restaurant. It was unrealistic," he told the M.E.N.

"There are only a couple of places in Manchester that could sustain that many covers and it was a bit naive.

"Now we realise that a 70 to 100 seat site is the right size for Burger and Lobster. We did realise a bit late, as you can see by the accounts, but the business is still fundamentally very good. The simplicity and the quality of what we do is still there."

(Image: Gary Louth)

Customers could also be facing price hikes as the company tries to offset its losses, the accounts reveals.

The restaurant ditched its £20 fixed price policy for its burgers, lobsters and lobster rolls last year, dropping burgers to £16 and pricing lobster dishes between £19 and £54.

‘Increases in selling prices [and] closure or sale of loss-making restaurant sites’ will be key strategies in future, according to the report.

Directors hope to keep the group trading and are said to have ‘reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future’.

But its failure to meet loan repayments is said to indicate ‘material uncertainties which may cast significant doubt about the company’s ability to continue as a going concern’.