Hospitality insolvencies rise 22% in February

Insolvencies in the accommodation and food services sector rose 22% month-on-month in February 2026. 

Official statistics showed 270 firms entered insolvency during the period, up from 222 in January.

The figures remained largely flat compared to February 2025, which saw 272 insolvencies. 

According to Saxon Moseley, partner and head of leisure and hospitality at leading audit, tax and consulting firm RSM UK, smaller independent businesses are facing the greatest pressure due to limited economies of scale.

Moseley added that operators are currently managing increased costs related to the Employment Rights Act and the National Minimum Wage. 

Rising business rates and a challenging tax environment have also been cited as factors affecting viability.

He warned that further disruption to energy costs and inflation could follow ongoing conflict in the Middle East. This potential volatility may further reduce consumer discretionary spending in the coming months.

Moseley said: “Hospitality insolvencies are back on the rise, which is unsurprising given the burdensome tax regime faced by operators combined with subdued consumer demand, making it increasingly challenging to stay afloat. While bigger operators tend to be better insulated due to having stronger balance sheets and economies of scale to fall back on, it’s the smaller, independent businesses that are struggling the most.

“Unfortunately, the outlook for the sector isn’t much rosier. The jump in insolvencies came even before the Middle East conflict, which if it continues, could hit consumer sentiment and discretionary incomes, combined with an expected rise in inflation and energy costs, resulting in a double whammy for the hospitality industry. Operators are already having to contend with the Employment Rights Act, and rise in National Minimum Wage and business rates, meaning some have, and others will, decide it’s no longer viable to keep their doors open.”

Gordon Thomson, restructuring partner at RSM UK, added: “Relatively weak sales in the hospitality industry along with relentless cost pressures have required some operators to explore restructuring options to optimise their trading position and to reduce their cost base. 

“It’s encouraging to see businesses taking action rather than burying their heads in the sand, but this highlights just how challenging it is to operate in the current environment. As pressures in the sector intensify in the coming months, we expect to see more operators having to consider restructuring options in order to survive.”