April drop in hospitality insolvencies though warning signs remain
Fresh data from the UK Government’s company insolvency statistics can reveal that insolvencies in the accommodation and food services sector were down 12% year on year for April, with 275 going bust during the month.
Good weather during the month boosted sales for the sector likely curbing the number of insolvencies seen.
The numbers also illustrate a 2.5% drop month on month compared to March. Although the figures show signs of hope, data from the CGA RSM Hospitality Tracker highlight that caution is still needed, with hospitality sales for May sliding 1% year on year.
According to Saxon Moseley, partner and head of leisure and hospitality at RSM UK: “This downturn in trade combined with inflationary pressures and global uncertainty means we could see a return to higher levels of insolvencies in the coming months.”
Moseley added: “Restaurant inflation ticked up slightly to 4.0% year on year in May, which is likely to be driven by operators passing on higher costs to consumers. However, the risk of putting prices up too much is that it could cause consumers to cut back spending, which could be detrimental to the sector during this crucial summer trading period.
“With consumer confidence continuing to improve and hotter weather in June, it’s hoped we’ll start to see this translate into more spending. The concern will be if inflation persists in areas that directly hits household budgets, this may delay any meaningful recovery in consumer confidence and future spend on eating and drinking out.”
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