New data suggests that insolvencies across the hospitality sector rose by 59% over the last 12 months to 2,156, while separate research showed that sales growth was being wiped out by inflation.
Insolvency specialists Mazars reported that in July alone there were 216 insolvencies across pubs, bars and restaurants, a 37% increase compared to the same period last year.
Outlook for the sector looks bleaker still, with the Night Time Industries Association, a not-for-profit trade body which represents businesses that operate predominantly between the hours of 6pm – 6am, reporting that three out of four night time economy businesses are on a “financial cliff edge.”
Today’s announcement by the government of the energy bill relief scheme was a welcome boost to the sector.
Kate Nicholls, chief executive of UKHospitality, a trade body which represents over 740 companies said, “This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter.”
“We particularly welcome its inclusiveness – from the smallest companies to the largest - all of which combine to provide a huge number of jobs, which are now much more secure.”
However, there are some concerns that the support isn’t enough, with energy costs one of many issues weighing on the industry.
Anna Leach, CBI Deputy chief economist, sais the announcement of support on energy bills "is a good first step".
Elsewhere, data on hospitality group sales in August showed a rise from pre-COVID-19 levels, but that inflation had wiped out growth in real terms.
Like-for-like sales at managed restaurants, pubs and bars were up 2.0% compared to August 2019, the Coffer CGA Business Tracker showed.
However, with compound inflation since 2019 in double digits, sales for hospitality groups remain well below the levels of three years ago in real terms, said CGA by NielsenIQ, which produced the data.
“The stark reality is that after adjusting for inflation, trading is lagging significantly behind," said Karl Chessell, a director at CGA.
"Hospitality is feeling the effects of the cost-of-living crisis as consumers watch their spending, and is facing soaring costs of its own across fuel, food, labour and other key inputs. With a difficult autumn and winter ahead, the sector needs urgent and bold help from government on energy and taxes to help protect businesses.”
In statements made before the government's energy bill announcement, Paul Newman, head of leisure and hospitality at RSM UK, said the need for long term government support for the UK eating and drinking out sector was "becoming desperate".
He said, without support for businesses, "many exceptional operators may be forced to take difficult decisions over the future of their business".
For the fifth successive month, restaurants were the strongest performing segment, with like-for-like sales growth of 2.8%.
Pub sales were up by 2.1% on 2019, while bars’ sales were down 3.5%.
Trading in London continued to lag behind many other parts of the country, with sales within the M25 down 2% compared to 3.2% growth beyond the orbital road.