Hospitality insolvencies decline but remain historically high

By Hamish Graham

Published: 28 April, 2025

Fresh data from the Insolvency Service shows an 11% drop in company insolvencies among businesses in the hospitality sector. The fall signals a slight improvement, however the number still remains historically higher than pre-pandemic levels.

For the 12 months to February 2025 the total number ‘accommodation and food services’ insolvencies stood at 3,406, down from 3,829 for the 12 months leading up to February 2024.

Zeroing in on the month of February, there were 271 businesses unable to pay their debts in the hospitality industry, a 20% decline compared to the same month last year.

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The risk of insolvency has clouded the sector in recent years, with a November 2024 report from Price Bailey highlighting that 12% of restaurants were at immediate risk of closure, as reported by Harpers.

Saxon Moseley, partner and head of leisure and hospitality at RSM UK, is heartened to see a drop in insolvencies but sees a new normal of high insolvency rates as taking hold.

He commented: “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.”

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