Is the hospitality sector reaching its breaking point?

Dermot Preston, Senior Solicitor

The hospitality industry has undergone great hardship over recent years, surviving a pandemic, a cost of living crisis, and successive waves of costs increases. But the latest figures suggest that resilience is wearing thin, and for many businesses, the margin between survival and insolvency has never been narrower.

Rising insolvencies, closures, and cost pressures across UK hospitality

Accommodation and food services accounted for 3,295 company insolvencies in the 12 months leading up to march 2026, which made for 14% of all cases in England and Wales, making it the most distressed sector in the country. Britain is losing 3.4 pubs and restaurants every single day, with more than 350 closures recorded in the first quarter of 2026 alone. UKHospitality has warned that figure could accelerate to six closures per day before the year is out.

The pressures are well documented, with higher employer National Insurance contributions, business rates revaluation, alcohol duty increases and rising energy costs all landing in quick succession. For a sector that has historically operated on margins of between 3% and 9%, there is very little room to absorb any one of these, let alone all of them at once.

Wider economic conditions are further adding to the strain: consumer confidence remains fragile, with households cutting back on discretionary spending, and geopolitical instability is pushing at energy and supply chain costs.

What does this mean for your business?

The ripple effect of hospitality insolvencies also extends well beyond the business itself: landlords can be left with empty commercial premises and rent arrears to recover, while lenders and suppliers can find themselves as unsecured creditors in an insolvency process.

For hospitality business owners, the consistent message from restructuring and insolvency professionals is to seek advice early. The options available to a struggling business narrow considerably once the financial pressure becomes critical. Acting while there is still time to explore restructuring, negotiate with creditors, or put contingency plans in place is far more likely to produce a favourable outcome than waiting to see whether things improve.

Whatever position you find yourself in, as a business owner, landlord, creditor or director, get in touch with our restructuring and insolvency team on 0161 832 3434 today to see how we can help you, or email us at [email protected].