Hospitality insolvencies drop to lowest level since January

The number of hospitality businesses entering insolvency has dropped to the lowest monthly figure since January in a sign some industry challenges are easing.

There was a 16% decline in accommodation and food service company insolvencies in August, dropping from 323 in July to 270.

This was also a 29% drop on August 2023, when 380 hospitality businesses went insolvent, according to government data.

However, the overall number of insolvencies remains 9% higher this year with 3,712 companies shutting down in the 12 months to August 2024, compared to 3,419 over the previous year.

There have been several high-profile independent closures in the last few months, with smaller restaurants struggling to bear the brunt of rising costs.

Recent closures include Simon Wood’s Wood Manchester, Nick Nairn’s Nairn’s in Bridge of Allan, Stirling, as well as Liz Cottam’s Home and Michael O’Hare’s Psycho Sandbar, both in Leeds.

Saxon Moseley, partner and head of leisure and hospitality at RSM UK, said businesses were still facing challenges despite the welcome drop in insolvencies.

“Hospitality businesses have experienced slow but steady revenue growth over the summer, while staff vacancies, food costs and services inflation have all reduced in recent months, pointing towards an easing of margin pressures which have put operators under significant strain,” said Moseley.

“However, already this month businesses have had to factor in the new tipping legislation as well as get to grips with proposed changes to workforce practices under the Employment Rights Bill. There are growing concerns about how the Budget will impact consumer confidence and the cost of employing staff, which could have a detrimental impact on the sector.

“At a time where the industry is trying to get back on its feet following a difficult couple of years of trading, it’s imperative that the government treads carefully to avoid damaging its fragile recovery.”

Read more: What is UKHospitality asking for in the Autumn Statement?

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