Huge increase in hospitality businesses in ‘distress’

08-Aug-2022 - Last updated on 08-Aug-2022 at 09:15 GMT

Information revealed: the hospitality sector fared the worst in the report, which highlighted businesses that were deemed to be in critical financial distress (image: Getty/Image Source)

There are 70% more bars and restaurants in “critical financial distress” than at this point last year, according to insolvency and restructuring advisor Begbies Traynor.

This compares to the overall number of UK businesses in critical financial distress having risen by more than a third (37%) over the same time period, The Times reported, with a 48% rise in the number of retailers struggling.

In the three months to the end of June, 1,957 companies were deemed to be in critical financial distress, according to Begbies red flag report, with hospitality the sector faring the worst.

Worrying picture

The data paints a “worrying picture”, Julie Palmer, a partner at Begbies Traynor said.

“Having emerged from the pandemic, many companies were hoping for an economic boom but that has simply fizzled out, as supply chain issues and the invasion of Ukraine have taken their toll by driving up raw material and energy costs and reducing both business and consumer confidence,” she said.

Significant financial distress

“We are now in a very high inflationary environment that’s piling pressure on businesses that were already weakened by the shock of the pandemic.”

The red flag report revealed there were a further 582,000 business in ”significant financial distress”, although this figure remains largely unchanged compared to the previous quarter.