Hospitality insolvencies set to rise further as cost pressures intensify

Analyst expects more restructuring as taxes, inflation and demand weigh on operators.

Hospitality insolvencies in the UK rose 22% month-on-month to 270 in February 2026, with the sector likely to face further pressure in the months ahead as cost burdens and weaker demand persist, a report by RSM UK said.

Insolvencies in the accommodation and food service sector were 222 in January, compared to 272 from the same period last year.

RSM UK said the February increase came amidst already elevated operating costs, including higher employment expenses, business rates and subdued consumer demand, which are expected to continue weighing on viability across the sector.

Saxon Moseley, partner and head of leisure and hospitality at RSM UK, said insolvencies are “back on the rise” and warned that the outlook remains challenging, with additional pressure expected from inflation and energy costs.

“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,” Moseley said. He added that bigger operators tend to be better insulated. Meanwhile, independent businesses are the ones suffering the most.

Gordon Thomson, restructuring partner at RSM UK, said more operators are expected to explore restructuring options to manage cost bases and maintain trading viability as conditions tighten, adding that the sector has yet to fully absorb current and upcoming cost pressures.

“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,” Thomson said.