Fears for hospitality sector as quarterly insolvencies soar
The restaurant sector is in danger of collapse, unless the Government pledges support in its upcoming Budget, claims Greater Manchester Night Time Economy Adviser, Sacha Lord.
His warning follows new figures that show a 46% increase in insolvencies in hospitality, nationally.
The figures, released from the Insolvency Service and analysed by RPG Chartered accountants incorporating Crawfords, revealed that the number of restaurant and food outlets going into liquidation nationally increased soared in the quarter to September 2022, from 108 in June to 158 by the end of August.
Sacha Lord, who is one of three night time advisers across the UK, has warned the data signals an impending collapse in the sector, and has once again urged the Government to support businesses in its upcoming Autumn Budget.
He said: “The data we have received today is just the tip of the iceberg, and shows a very worrying trend which, we believe, will only get worse over the months to come.
“An increase of nearly 50% in insolvencies in three months shows the sector in an extremely worrying state and it is now entering winter in freefall.
“There is a severe lack of confidence among operators, particularly those running small independent businesses, and this has been exacerbated by the confusion over possible business support and ongoing U-turns.”
He added: “The implementation and subsequent reversal in the freeze on alcohol duty is just one example where planning has been made impossible, adding to the despondency and anxiety across the board.
“The stark truth is that hospitality businesses are paying more for ingredients, energy and day to day business needs than they were this time last year, and we are seeing venues shutting due to financial difficulties on a daily basis. The sector urgently needs support through a reduction in VAT and through business rates relief, both measures that will undoubtedly offer operators a lifeline.”
Gareth Hunt, licensed insolvency practitioner at RPG Chartered Accountants, said: “We are seeing more smaller and medium (sized) businesses across the board in Greater Manchester and the surrounding areas beginning to struggle with ongoing financial commitments, and within our insolvency team we have had a number of restaurants, fast food outlets and pubs entering into liquidation this year.
“The main catalysts of these closures have been the increase in business costs and gas prices, interest rates rises, reduced footfall and, unfortunately, we are wholly expecting this trend to rise further, over the winter months in particular.”
The figures echo separate research by UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster this week, which showed that 35% of operators were expecting to be operating at a loss or be unviable by the end of the year, with 96% experiencing higher energy costs and 93% facing food price inflation.