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UK Pubs, Restaurants and Hotels at risk of bankruptcy in 2023

  • 22/12/2022
  • Paul Atkinson


Recent polls from the pub and hospitality industries in the UK have revealed the dire position hospitality firms face throughout the country as they battle inflation, rising energy costs, and staffing, which might force them to operate at a loss or perhaps go out of business by 2023.

Every sector of the hospitality industry, from bars and pubs to restaurants and hotels, faces unique challenges to avoid bankruptcy and thrive for the foreseeable future. Therefore, it would be good to compile the findings of these various surveys into one post.

UK Restaurants are failing at an alarming rate.


According to a recent survey conducted by the UK Hospitality and the British Beer and Pub Association (BBPA), more than a third of the UK's pubs, restaurants, and hotels expect to be operating at a loss or go out of business by 2023 as a result of rising energy and food costs and falling bookings and have been forced to prop up their businesses using their savings to survive.

By the end of the year, 35% of respondents expected to be operating at a loss or be unviable, with 96% predicting greater energy prices and 93% expecting food price increases.

In addition, 60% of the hospitality sector is facing bankruptcy or has become insolvent or closed its doors for good. 

In a joint statement by UKHospitality, BBPA, the British Institute of Innkeeping (BII), and Hospitality Ulster

“If the Government wants to be turbo-charging sectors of the economy, our dynamic hospitality industry is prime to grow. But it needs to survive this generational crisis first.

“Further business rates relief is critical to avoid businesses facing a cliff edge in April next year, and, in the long-term, a move to cut VAT for hospitality would do wonders in giving consumers the confidence they need to support their local hospitality businesses, which are so crucial to our local communities and the economy.

“We would all encourage the Prime Minister, Rishi Sunak, to work with the sector on these suggested measures and what further action can be taken to ensure hospitality continues to thrive well into the future.”

Restaurant owners plowing their own money into their enterprises

According to audit, tax, and advice company Mazars, the amount that restaurant owners have ploughed into their own companies has jumped 12% in the last year, from £377 million in 2020/21 to over £424 million in 2021/22, 

Rising food and labour expenses and spiralling energy prices have placed a financial strain on many companies. The popularity of online ordering has made it more difficult for restaurants to turn a profit forcing many restaurant owners to pour additional funds into their business operations to survive. In a desperate attempt to generate capital to lend to their businesses, several restaurant owners are re-mortgaging their homes or cashing in their investments to keep their enterprises running.

Despite plummeting sales, several restaurant owners have been forced to increase employee wages to attract new staff to fill vacancies created by the post-Brexit shortage of workers.

Due to challenges in obtaining capital elsewhere, struggling restaurant owners have been forced to lend their own money to their enterprises. Because of the restaurant industry's obstacles, high street lenders are hesitant to boost their lending to smaller restaurant operations. High-interest rates have made loans unaffordable for many business owners.

In December 2022, Insolvency Service reported 435 restaurant insolvencies in the last quarter, a 15% increase from 395 in the previous three months.

Before the energy crisis, the hospitality sector returned strongly from the pandemic. It showed real signs of growth, but restaurant owners should pause for a moment before pumping more of their life savings into their businesses, however desperate the situation.

CoCredo Credit Report Agency can help 

The main takeaway for the hospitality industry is to be proactive at the first signs of financial difficulty. Please tackle the issue to avoid further stress and economic problems impacting your customers, workers, and shareholders.

CoCredo is a market-leading firm that provides online business credit reports that use the most up-to-date company credit check information on millions of businesses in the UK and worldwide to assist clients in avoiding risk, protecting against fraud, and monitoring financial behaviours, and increasing cash flow efficiency.

With over 20 years of experience, it is critical to follow any changes in the organisations you work with. We combine credit risk data to provide an accurate picture of your clients and their payment habits, allowing you to safeguard your company from any hazards so you can try and stay one step ahead.

Our friendly and knowledgeable team has helped businesses of all sizes across numerous industries view the credit score of any business in seconds so they can understand if a company is growing and financially stable. Why not request a free trial business credit report when you call us at 01494 790 600 or email us to learn more about our UK and Ireland business credit check report service?

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