The numbers tell a story of stalled recovery. More than 3,300 hospitality businesses entered insolvency proceedings last year, according to the Buchler Phillips hospitality index—barely an improvement on 2024's toll of 3,465. But here's what should alarm anyone watching the sector: the insolvency index itself climbed through 2025, rising from 181.2 in the first quarter to 187.3 by December.
This isn't a sector bouncing back. It's one treading water whilst wearing increasingly heavy boots.
The figures, drawn from insolvency data for accommodation, food and drink operators over the twelve months to December 2025, suggest that government interventions have failed to arrest what amounts to a slow-motion collapse of Britain's hospitality industry. Among those 3,353 businesses, 539 were pubs or bars, continuing a trend City AM reported in November showing pubs closing at their fastest rate this century.
High-profile casualties included Leon, which entered administration in December with its new owner immediately announcing job cuts and site closures. Pizza Hut franchise operator DC London Pie collapsed in the final quarter, wiping out 79 locations and 1,160 jobs in a single stroke.
The £4bn question
Buchler Phillips, the restructuring firm behind the index, estimates operators face up to £4bn in additional costs and would need to implement price increases of around 8% merely to maintain current operations. That figure warrants scrutiny—Buchler Phillips has a commercial interest in insolvency work—but the direction of travel is indisputable even if the precise quantum might be debated.
Jo Milner, managing director at the restructuring firm, offered a stark assessment: "There is no sign of hospitality budging from near the top of the insolvency table in the foreseeable future. As last year's budget changes kick in fully, even last minute government measures will provide little respite for the stricken sector."
Those budget changes represent the immediate pressure point. April brings the national minimum wage increase, adding fresh strain to labour costs that already represent one of hospitality's largest expense lines. Later this year, the Employment Rights Act implementation will compound recruitment and retention costs—Jennifer Lockhart, a partner at law firm Brabners, notes that businesses are "managing multiple demands with limited headroom."
What's particularly galling for operators is the sense of being caught between immovable costs and customers increasingly resistant to price increases. Food inflation has eased from its 2022-23 peaks but remains elevated. Energy costs, whilst down from their crisis highs, haven't returned to pre-pandemic levels. Labour costs are rising by regulatory fiat.
The business rates battleground
The year was marked by what the industry characterised as a bitter dispute with the Treasury over business rates reform. Hospitality operators had pushed for meaningful relief on a tax system that disproportionately burdens property-intensive businesses. What they received instead were measures the sector deemed inadequate—a recurring theme in the relationship between this government and an industry that employs roughly 3.2 million people.
The business rates question matters because it's one of the few cost lines that policy could meaningfully address in the short term. Minimum wage levels are politically untouchable. Food inflation is largely imported. Energy costs are global. But business rates represent a domestic policy lever that remains, in the industry's view, stubbornly unpulled.
The sector's demands for reform aren't new, but the insolvency figures give them fresh urgency. When nearly one in ten hospitality businesses that existed at the start of recent years don't make it to the end, the case for structural intervention becomes harder to dismiss as special pleading.
What comes next
The insolvency index's upward trajectory through 2025 suggests the worst isn't behind us. April's minimum wage increase will hit first, followed by the Employment Rights Act implementation. Operators who've survived this long by cutting margins, reducing opening hours, or refinancing debt will find their options increasingly constrained.
Smaller independent operators face the sharpest edge. Chains possess economies of scale, procurement leverage, and access to capital markets that sole traders and family businesses lack. The 8% price increase that Buchler Phillips suggests is necessary might be absorbable in central London or affluent market towns. In struggling high streets and working-class neighbourhoods, it could prove fatal.
The sector's defenders would argue hospitality provides something beyond its direct economic contribution—it's the fabric of community life, the third place between home and work. But sentiment doesn't pay suppliers or meet payroll. Unless cost pressures ease or government intervention becomes more substantive, 2026's insolvency figures seem destined to tell the same grim story.
For consumers, the arithmetic is straightforward. Either prices rise, or venues close. Probably both.
