Hospitality Business Turnaround: Rescue Options for Restaurants, Pubs and Hotels
A struggling hospitality business can often be rescued by closing or renegotiating the sites that lose money and protecting the ones that work. Wage costs, rent and energy leave very little margin for error, so the earlier the directors act, the more of the business can be saved. Formal tools such as a CVA or restructuring plan were widely used in this sector to deal with leases.
Hospitality & Food Service insolvencies: what the data shows
K2 tracks every corporate insolvency notice published in The London Gazette and matches it to the company's Companies House record and last filed accounts. These figures cover hospitality & food service companies on our record since July 2026, excluding solvent members' voluntary liquidations. They count notices, not companies: one insolvency usually produces several notices.
hospitality & food service distress notices in the last 30 days
distress notices in the last 90 days
companies named in those notices
Distress notices per month
The current month is incomplete.
What these companies looked like before insolvency
Based on 1,056 hospitality & food service companies with a distress notice on our record (solvent members' voluntary liquidations excluded), using each company's Companies House profile and last filed accounts.
- Negative net assets at last filing
- 57%
- of 814 with filed figures
- Age of last accounts at first notice
- 19 months
- median
- Accounts overdue at Companies House
- 42%
- of 1,049 profiles
- Company age at first notice
- 6.3 yrs
- median · 21% under 3 years
Median total assets in the last filed accounts: £68k. Figures are the companies' own filings and often predate the insolvency by a year or more.
The pattern matters more than any single figure: 57% of these businesses had already filed a balance sheet showing negative net assets, and the median set of accounts was 19 months old by the time the first insolvency notice appeared. The warning signs were on the public record long before the Gazette notice. That window is when a turnaround is cheapest and most likely to work.
Most affected trades
Hospitality & Food Service insolvencies by region
- London383
- The North West346
- Yorkshire and the Humber220
- The West Midlands180
- The East of England173
- The South East172
- The East Midlands128
- Scotland128
Latest hospitality & food service insolvency notices
Why hospitality businesses get into difficulty
Hospitality is labour-intensive, and labour is the cost that has risen most. The National Living Wage goes up every April, and from April 2025 employer National Insurance rose to 15% while the threshold at which employers start paying it fell sharply. For a business with many part-time staff, that threshold change can cost more than the rate rise itself. Most operators cannot pass the full increase on to customers without losing covers.
Property is the second pressure. Many restaurant and pub groups signed long leases with upward-only rent reviews during expansion, and a portfolio that made sense at one level of trade can become unaffordable when footfall shifts. Business rates remain a large fixed cost, and the pandemic-era rates relief for retail, hospitality and leisure has been scaled back, so check the current position for each site.
Energy, food and drink costs are volatile, and fixed energy contracts signed at the wrong moment can take years to unwind. Customers have become more price-sensitive and book later, which makes staffing and stock harder to plan. The result is a business that can look busy yet generate no cash.
Hospitality also collects VAT and PAYE on behalf of HMRC every day, so tax arrears are often the first debt to build. Our guide to dealing with HMRC debt explains what HMRC will usually accept.
Warning signs in a hospitality & food service business
One or two sites carrying the rest
The group is profitable only because a few strong sites subsidise others that lose money every week.
Rent paid late or on payment plans
Quarterly rent is becoming a crisis each quarter day, and landlords are chasing arrears.
VAT and PAYE arrears
Tax collected from customers and staff is being used as working capital.
Wage costs above a sustainable share of sales
Labour cost as a percentage of revenue has crept up and rotas have not been reset.
Gross margin falling
Menu prices and specifications have not kept pace with food, drink and energy costs.
Suppliers restricting credit
Drinks and food suppliers are moving you to shorter terms or cash on delivery.
Refurbishment deferred
Sites are looking tired because there is no cash to reinvest, which pushes trade down further.
See the full warning signs a business needs a turnaround, or check any company's public-record warning signs with our free company health check.
Turnaround and rescue routes for hospitality & food service businesses
1. Site-by-site profitability review
Measure each site's contribution after its own rent, rates, labour and energy. Decide which to keep, which to renegotiate and which to exit. This analysis drives every other decision.
2. Menu, pricing and rota reset
Re-engineer the menu around margin, reduce waste and rebuild rotas around actual trading patterns. These changes are informal, quick and often worth more than any debt deal.
3. Negotiation with landlords
Many landlords would rather agree a rent reduction or turnover-linked rent than find a new tenant. A credible plan supported by site numbers strengthens that conversation.
4. Company Voluntary Arrangement
A CVA can compromise rent on poorly performing sites and deal with arrears while the business keeps trading, provided creditors holding the required majority vote in favour.
5. Restructuring plan
For larger groups, a restructuring plan allows the court to bind classes of creditors, including landlords, who vote against it, if they would be no worse off than in the relevant alternative.
6. Pre-pack administration
Where the group cannot be saved as a whole, a pre-pack can transfer the viable sites and their staff to a new company, leaving unviable leases behind.
How K2 runs a turnaround, stage by stage, is set out on our business turnaround page.
Frequently asked questions
Can I close some restaurants without closing the whole business?
Yes. Exiting individual sites is often the core of a hospitality turnaround. It can be done informally through surrender or assignment of the lease, or formally through a CVA or restructuring plan that compromises the landlord's claim. The right route depends on the lease terms, any guarantees you or a parent company have given, and whether the landlord is willing to negotiate.
Will a CVA let us reduce our rent?
A CVA can propose rent reductions or lease exits for specific sites, but it only binds landlords if at least 75% by value of creditors voting approve it and it is not successfully challenged. Landlords have challenged some CVAs where they felt treated unfairly compared with other creditors, so the proposal needs to be fair and evidence-based. Getting landlord support in advance makes approval far more likely.
What happens to staff if the business goes into administration?
In a pre-pack or other sale, employees at the sites that are sold normally transfer to the buyer under TUPE, on their existing terms. Staff at sites that close may be made redundant, and can claim certain statutory payments from the Redundancy Payments Service if the employer cannot pay. Our guide to employee rights explains this in more detail.
How do rising wage costs affect whether my business is viable?
Viability depends on whether each site can cover its costs after the latest wage and National Insurance increases, not on turnover. A business that was marginal before April 2025 may now lose money unless prices, rotas or opening hours change. Rebuild your forecast on current costs, identify the sites and trading hours that no longer pay, and act on them before arrears build.
Are personal guarantees on leases at risk?
They can be. Many directors of smaller hospitality businesses have personally guaranteed a lease or a loan, and those guarantees usually survive the company's insolvency. A good turnaround plan addresses guarantees from the start, for example by negotiating their release as part of a lease deal. See our guide to personal guarantees.
Talk to a turnaround specialist
K2 offers a no-charge, confidential initial assessment for hospitality & food service businesses anywhere in the UK. We will tell you honestly whether the business can be turned around, which route fits, and what to do first.
Confidential consultation · Honest about viability · UK-wide
Related guides
Company Voluntary Arrangement Guide
How to Deal with HMRC Debt
Personal Guarantees on Business Loans
Employer Gone Bust? Your Rights to Redundancy, Wages & Holiday Pay
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