Hospitality accounts for 10% of company administrations in 2023
The hospitality industry accounted for 10% of company administrations in the first six months of 2023 – the fourth highest sector in the UK.
A total of 759 businesses, 79 of which came from the hospitality industry, filed for administration between 1 January and 30 June 2023.
This marked a 22% increase compared to 2022 but is still below pre-Covid levels, as 940 companies entered administration in the first six months of 2019.
Law firm Shakespeare Martineau analysed data from the Gazette Official Public Record and found hospitality, retail, manufacturing, construction, and real estate were the worst-hit sectors and accounted for 57% of all administrations this year.
Hospitality firms bought out of administration this year include pub operator and brewer True North Brew Co, vegan fast food brand Vurger Co, bar group Dirty Martiniand New York-inspired restaurant chain Dirty Bones.
Andy Taylor, partner, and head of restructuring at Shakespeare Martineau, said the figures were "no surprise" but warned more companies were at risk of failure unless inflation and interest rates began to fall.
The Bank of England raised interest rates to a 15-year high of 5.25% from 5% on Thursday, which UKHospitality warned would only "exacerbate" the challenges faced by hospitality businesses.
Taylor said: "We're seeing a steady flow of corporate failures. Should some other ‘bad news' rear its head, then that is only likely to increase. Businesses and individuals need to see interest rates and inflation come down. With a period of stability, we will see confidence increase."
The retail industry replaced construction as the worst-hit sector during the first six months of 2023, with filings almost doubling compared to 2022.
A quarter of companies entering administration were in Greater London, the highest of any area, followed by the north-west of England (15%) and south-east of England (11%).
Taylor added: "Consumer spending is shrinking and footfall on the high street and in restaurants is declining as a result. The pressure is also on businesses as they face higher borrowing costs and energy expenses, so they are being squeezed from both sides.
"Our advice remains consistent – seeking professional advice early can open up more options for struggling businesses. It is crucial not to ignore the signs and bury your head in the sand, and, instead, take a proactive approach to address underlying issues."
