The UK catering and hospitality industry continues to face significant financial pressures, with 3,464 businesses in the sector entering insolvency in 2024. This includes hotels, restaurants, and pubs that were unable to withstand mounting economic challenges.
Although this figure represents a 7% decrease from 2023’s total of 3,737 insolvencies, it remains alarmingly high, reflecting ongoing difficulties within the industry.
Key Industry Struggles in 2024
Several notable hospitality operators have recently succumbed to financial strain. High street units for brands such as Chipotle and Itsu have closed, while the tapas chain Iberica was sold out of administration. Additionally, Greens, a renowned Manchester-based vegetarian restaurant owned by Simon Rimmer, collapsed owing over £500,000.
The Buchler Phillips Hospitality Index, which tracks monthly insolvencies, showed a slight improvement — softening from 186.4 in September to 175.3 in December 2024. However, despite this reduction, monthly hospitality insolvencies consistently exceeded 220 throughout the year, highlighting persistent financial strain.
Upcoming Challenges for the Hospitality Sector
Looking ahead, the hospitality industry faces further pressures, with businesses expected to bear an estimated £3.4 billion in additional costs. A significant factor contributing to this is the upcoming increase in employers’ National Insurance contributions.
Industry leaders have warned that to counterbalance these rising costs, hospitality operators may need to increase prices by 6% to 8%, which risks weakening consumer spending even further.
Moreover, with tax changes taking effect in April 2025, over two-thirds of hospitality businesses are anticipating a reduction in staffing levels — a move that could further impact service standards and operational efficiency.
Conclusion
While the slight reduction in insolvencies during 2024 is encouraging, the UK catering and hospitality industry continues to navigate turbulent waters. With additional costs, tax changes, and consumer spending pressures looming, businesses must prepare for further challenges to safeguard their future.
For those concerned about financial stability, seeking early advice from insolvency professionals can help identify potential solutions and strategies to mitigate risk.
