More than a third of UK hospitality firms ‘could go bust by next year’

Some pubs and hotels have already closed or said they are shutting down for the winter because they cannot deal with the high costs.

With nearly all businesses saying they face higher energy costs and food price inflation, 35% of respondents to a quarterly hospitality industry survey said they expected to be operating at a loss or to be unable to continue trading by the end of the year.

More than three-quarters of operators, 77%, reported a decrease in diners and drinkers, and 85% expected the situation to worsen, according to a joint report by UK Hospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster.

“The vulnerability of the sector due to soaring energy costs, crippling rises in the cost of goods and dampening consumer confidence is on full display in this survey and, if urgent action isn’t taken, it is looking incredibly likely that we will lose a significant chunk of Britain’s iconic hospitality sector in the coming weeks and months.”

Hospitality businesses, many of which were hit by months of enforced closure under government pandemic lockdowns, experienced a bounceback in trading this summer as people enjoyed the ability to socialise more freely.

However, the recovery has been limited by the surging cost of food and shortages of labour, particularly for skilled roles such as chefs, which have led to hefty pay inflation.

Some pubs and hotels have already closed or said they are shutting down for the winter because they cannot deal with the high costs.

The hospitality sector is still recovering from Covid-19 pandemic lockdowns and is being hit by rising inflation directly – through increased staff, energy, food and drink costs – and indirectly, as consumers have less money to spend on going out.

More than half of Britons have said they plan to cut down on non-essential spending, according to the latest survey by the credit and debit card operator Barclaycard, as the key Christmas trading period when most businesses make their profits nears.

Three fifths of those cutting back say they will reduce meals out. Almost a third of Britons are taking packed lunches into work instead of buying food on the go.