Accounting firm RSM UK has warned operators must act now to stave off the challenges of the current trading environment amid a month-on-month uptick in insolvencies across the sector.
The government’s latest company insolvency statistics show the number of accommodation and food service businesses to fall into insolvency rose 9% month-on-month in January compared to December, from 205 to 223.
In slightly more positive news, however, insolvencies dropped 18% year-on-year from 273 in January 2025.
“Most hospitality operators held on at the end of last year to capitalise on Christmas trading, before having to assess their options in January,” says Saxon Moseley, commenting on the figures.
“The persistent wet weather and fragile consumer confidence has meant it’s been a tough start to the year for the industry.
To support this, Moseley points to the NIQ RSM Hospitality Business Tracker, which showed flat like-for-like sales in January.
He goes on to note that hospitality consistently features in the top three industries experiencing the highest number of insolvencies, highlighting it’s one of the hardest hit by relentless cost increases such as higher taxes, national minimum wage and inflation.
“While it’s encouraging to see a drop in hospitality insolvencies year-on-year, this may be in part due to the sector shrinking overall, as the challenging trading environment makes it difficult to not only enter the market, but to compete,” he continues.
“With more headwinds to come, operators must act now to preserve cash, explore cost-cutting options, and most importantly, protect the customer experience to keep people coming through the door.”
