The number of businesses in the food service and accommodation sector becoming insolvent have increased by 37% according to figures released by the insolvency service.
The company insolvency statistics show accommodation and food services insolvencies increased 30% in Q4 2023 (from 775 in Q4 2022 to 1,013 in Q4 2023) and were up 37% on an annual basis (from 2,712 in 2022 to 3,726 in 2023).
Alarmingly, insolvencies have increased at a faster rate during the past 12 months.
Robyn Duffy, consumer markets senior analyst at RSM UK, comments ‘Despite positive sales numbers in 2023, with like-for-like sales up 5.8% on average, there was a significant jump in the number of insolvencies in the hospitality industry in Q4 2023, and on an annual basis.
‘Crippling costs will have been the last straw for some operators, with energy costs still around twice as high as they were pre-Covid. Additionally in April, we’ll see the largest ever single increase to the National Living Wage for those aged 21 and over (increasing £1.02 to £11.44), and a similarly sharp increase across other age groups.
‘Without support from the government to manage the escalating costs for these businesses in the form of VAT relief or otherwise, it’s likely the distress we’ve seen will continue at least until H2 2024. The second half of the year brings greater hope of a further boost to demand with economic factors impacting consumer spending beginning to enter positive realms – interest rates should fall from summer; inflation is forecast to hit 2% in Q2, and real wages will continue to grow. But until then, the sector looks set to see continued distress for now.’
