59% hike in hospitality insolvencies
What’s more, there has been 216 insolvencies of hospitality venues in just the past month – up 37% from 158 in July, according to the new data from audit and advisory firm Mazars.
The situation is bleak for businesses across the board. Overall UK company insolvencies have increased by 72% in the past year (ending August 31 2022), from 11,949 to 20,512.
Mazars partner Adam Harris said: “Many UK businesses were already in a weak position before energy prices surged. The size of energy price rises was always likely to cause some businesses to close, but the scale and pace of these insolvencies is especially concerning.”
Financial struggles
Since last September, businesses have grappled with financial challenges including rising wages, a cost-of-doing business crisis, inflation and soaring energy costs.
Harris believed many small business owners in particular were struggling under the weight of multiple crises, often without the resources or financial cushion to see them through.
He said: “The hospitality sector is facing an unusually challenging environment as the cost-of-living crisis hits them from both sides.
“Just as their energy costs are spiral and their interest costs rise their customers are cutting spending on non-essentials such as eating out.”
“The Government’s upcoming energy package will be key to determining whether many businesses survive. Unless the picture dramatically changes, we are likely to see many more businesses close their doors in the months to come.”
Shutting up shop
The Campaign for Real Ale (CAMRA) revealed pub closures had doubled in the first half of 2022 against the six months of last year.
In the second half of 2021, 254 pubs were recorded as ‘long term closed’, at a rate of 9.8 a week. However, in January to June 2022, this had risen to 485 – almost twice the weekly rate of the previous half (18.7).
Among these is Brighton Beer Dispensary, East Sussex, which was forced to close its doors due to rising electricity bills and issues caused by Brexit.
BrewDog has recently closed six bars to cope with soaring energy costs, and the Railway Inn, Rodley, Leeds has also shut its kitchen.
Manchester-based Beatnikz Republic Brewery also had to cease trading in May, with rising prices being the “last straw” following two years of Covid-related difficulties.
