Analysis by audit, tax and consulting firm RSM UK also shows that insolvencies in the sector were also up 4% from 285 in May 2024.
It follows a 12% year-on-year fall in sector insolvencies in April amid a boost a trade caused by sunny weather over the month.
“Today’s figures show the cost pressures and challenges faced by the hospitality industry are really starting to bite,” says Saxon Moseley, partner and head of leisure and hospitality at RSM UK.
“Higher staff costs and rising inflation, combined with subdued consumer spending, means some operators are simply running out of runway. Many have reached their limit in passing on costs to customers and are currently in survival mode.”
Moseley notes that the rise in insolvencies is one of many warning signs that the industry is struggling, alongside the reduction in payrolled employees and sluggish trade.
“The Government would do well to take notice before it’s too late,” he continues.
“Operators want to see an overhaul of the business rates system that offers a meaningful reduction in rates to create a more level playing field. Plus, some form of reversal in the employers’ National Insurance increase, such as upping the threshold at which it becomes payable, would create significant savings for hospitality businesses and signal support for the sector.
“While nervousness among consumers remains a concern, some form of government assistance would help to take some of the pressure off.”