Figures show that the hospitality industry accounted for 12% of administrations in 2023 – the third highest sector in the UK.
A total of 1,641 businesses, 190 of which came from the hospitality industry, filed for administration last year – marking a 22% increase compared to 2022 and 91% rise in comparison to 2021.
There are fears the numbers could rise further in the year ahead too.
This month alone has seen several high-profile restaurants permanently close their doors amid insurmountable cost pressures.
They include Simon Rimmer’s Didsbury restaurant Greens; Tony Rodd’s Copper & Ink restaurant in Blackheath, south east London; James Allcock Yorkshire bistro The Pig and Whistle in Beverly; and Phill and Deb Lewis’ sustainability-focused Cardiff restaurant Kindle.
“The significant uptick in the number of companies filing for administration in 2023 underscores the challenges faced by businesses amid changing consumer habits, financial pressures, and geopolitical uncertainties,” says Andy Taylor, partner and head of restructuring at Shakespeare Martineau.
“A shift in consumer buying habits, exemplified by a challenging January for the hospitality sector, adds to the narrative of subdued spending.
“Moreover, HMRC continues to be more active, with threatened enforcement pushing businesses towards considering their options, and many opting for administration as an alternative to being wound up on a compulsory basis.
“Many predict the rate of inflation to continue its downward trajectory in 2024, perhaps even approaching Bank of England’s target of 2%.
“If that trend continues one might anticipate something like three interest rate cuts in 2024, which will hopefully stimulate growth. However, the economic landscape remains unpredictable.”