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Number of businesses that went into administration doubles in Q3

23 October 2019 by
Number of businesses that went into administration doubles in Q3

The number of restaurant, pub and club companies that fell into administration almost doubled in the third quarter (Q3) of 2019 amid "perfect storm".

That's according to new analysis of notices in the London Gazette by KPMG, which found that the number of administrations in the sector rose from 14 in Q2 to 26 in Q3.

High-profile examples include the pre-pack administration of Cabana Restaurants, Spud-U-Like and All Star Leisure.

Licensed restaurants were hardest hit, accounting for 14 out of the 26 insolvencies, while pubs fared better over the last quarter with four companies going into administration.

The study indicated a difficult period for UK organisations across the board, with a total of 417 companies falling into administration between July and September 2019, an increase of more than a third from the previous quarter.

Paul Berkovi, director in restructuring at KPMG, said: "It is no surprise that in today's economic climate, customers are being more cautious about how they spend the pounds in their pocket.

"On top of dwindling consumer confidence, the hospitality industry also has to contend with rising overheads, fluctuations in exchange rates and increasing employments costs. Combine this with general political uncertainty making future planning extremely difficult and it is a perfect storm which is hitting the sector hard."

KPMG's global head of leisure and hospitality Will Hawkley added: "Those that are weathering this storm are taking the time to really understand what their customers want from them, and are working to deliver this in new and innovative ways.

"If customers are going to be tempted to part with their hard-earned cash then experience is key. Having robust systems in place such as agile end to end supply chain management and tech enabled processes to help capture and measure customer preferences, and enhance the customer experience, will help companies flex for the future."

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