Company insolvency statistics show accommodation and food services insolvencies were down 11% from 3,829 in the 12 months to February 2024 to 3,405 in the 12 months to February 2025. Insolvencies in the sector fell 20% to 271 in February 2025, compared to the same month last year (339). However, they remain historically higher than pre-pandemic levels.
Saxon Moseley, partner and head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, said:
“It’s encouraging to see hospitality insolvencies down on last year, but they remain historically high when compared to pre-pandemic levels, suggesting this elevated level of insolvencies is the new normal for the industry.”
“In recent years, we’ve seen less viable businesses in the hospitality sector either exit the market or undergo restructuring, meaning only the more resilient operators are left. While the industry is still losing a large number of businesses each month, naturally, these numbers should start to fall as less viable brands close up shop.”
“Operators are facing significant economic and geopolitical uncertainty which is weighing heavily on consumer confidence. This, combined with April’s rise in employment costs, means it could be a challenging few months to come. Hospitality trade continues to be particularly weak, as consumers are opting to increase spending on retail rather than dining out. However, with the warmer weather making an appearance and real wages continuing to climb, it’s hoped the sector can enjoy a strong summer of trading to see it through the various headwinds.”
Stephen Goderski, Partner at restructuring and insolvency firm PKF Littlejohn Advisory said:
“According to the latest government statistics for Q1 2025, the number of registered company insolvencies across the UK has reached 1,992, reflecting a fall of 2% compared to February 2025.”
“Throughout the first quarter, the UK economy continued to face a series of domestic challenges, exacerbated by broader global instability and the actions of a hugely unpredictable US administration.”
“Inflation remains a significant issue, exerting pressure on purchasing power and complicating the financial environment for both consumers and businesses alike. The Consumer Prices Index (including owner-occupiers’ housing costs) rose by 3.4% in the 12 months to March 2025, down from 3.7% in February. This slight easing is welcome, but the overall economic landscape remains precarious. Businesses continue to face enormous pressures, and the mood music from the US is obliging many companies that rely on international trade to re-assess their future credit and operational strategies.”
“Despite living ‘in interesting times’, and perhaps counter-intuitively, insolvencies have fallen. The fall, however, does not especially suggest a trend, and many companies are still under pressure, although there will always be businesses which can turn uncertainty to their advantage. For the rest -as well as managing inflation, increased employers’ National Insurance Contributions, higher minimum rates of pay and rising borrowing costs – cash management is key and that means customers paying regularly and on time. Boards have to ensure that every aspect of the business is functioning at near optimum level. For example, poor credit control leads to cash flow issues and slippage in the payment of suppliers, which can lead to supply issues. This can quickly become a slippery slope.”
“Uncertainty is the biggest ongoing threat, especially to those businesses seeking investment. Boards need to be agile and maintain options. It remains to be seen whether the government’s economic strategy will provide stability and economic growth, or whether further economic shocks will spiral into a recession.”
“So while a fall in insolvencies is always welcome, it may be a false dawn. For those businesses starting to experience cashflow issues, it is imperative that boards demonstrate their oversight by seeking early professional help. There may well be opportunities which will need to be explored but a responsible board will also prepare for the worst with robust contingency planning.