Significant rise in pub and bar insolvencies

The latest statistics from UHY Hacker Young which reveal the financial difficulties faced by pubs and bars are disappointing and very concerning.

According to the national accountancy firm, insolvencies rose from 280 in 2020/21 to 512 as of the end of 2022. Given the perfect storm caused by rising inflation, the cost-of-living crisis, staff shortages and escalating salary costs, it perhaps isn’t too surprising. Nevertheless, corporate failure is not inevitable and businesses can do something about it.

There are, for example, a number of ways in which pubs and bars can cut costs. Hospitality businesses, for example, could analyse when the peaks and troughs in trade are and choose their hours to match peak periods rather than having the lights and heating on for minimal returns. Businesses could also consider benefits they could offer their staff instead of a pay rise such as bigger discounts or increased amounts of holiday entitlement, or greater flexibility on working hours. My colleague Jo Moseley has written more about this recently here.

But what should a business in the hospitality sector do if it is struggling to deal with the current tough climate and feels that it’s future is at risk?

I spoke to our National Head of Restructuring and Insolvency, Andrew Walker, who shared his views about what management teams should be considering. Andrew said: “If a business is considering a restructure, it should be engaging with restructuring experts straight away. From experience, three months is an ideal minimum lead-in so if signs of distress are noticed, it should seek advice immediately to ensure it has as many options as possible open to it.”

He added: “Seeking advice early is by far the most important piece of advice for a business that is undergoing difficulties and considering a restructure. Too many management teams bury their head in the sand but facing up to difficulties earlier gives organisations time to plan and take action whether that be to raise finance, cut costs and increase sales.

“Planning and preparation are key during times of economic uncertainty. Getting to grips with the key issue of cash flow and forecasting to ensure liabilities can be met at pinch points is vital”.

How we can help

For further information about our expertise in the hospitality sector, please contact our sector lead, Charlotte Rees-John.

Pub and bar company insolvencies have increased by 83% in the past year, according to new data from UHY Hacker Young.
Insolvencies rose from 280 in 2020/21, to 512 as of 31 December 2022.

Food and drink cost inflation and rising energy prices, combined with reduced footfall due to rail strikes and the cost of living crisis, have impacted sales and increased insolvencies.

“It’s deeply concerning that so many pubs and bars are closing their doors,” says Peter Kubik, partner at UHY Hacker Young.”