The food and drink sector accounted for 6% of company administrations in the UK in the first half of 2022, new data from Shakespeare Martineau has found.
Of the 620 businesses that filed for administration in the UK between 1 January and 30 June, some 39 came from the food and drink industry, which is 60% higher than the same period in 2021.
This data also includes breweries and restaurant chains, the law firm said.
Construction, manufacturing and retail were the sectors worst hit, accounting for 40% of administrations, according to the data.
“The latest figures make depressing, if unsurprising, reading," commented Matt McDonald, partner and food and drink sector lead at Shakespeare Martineau. "Most businesses have suffered to some extent over the past two years, but some businesses within the food and drink sector have been particularly hard-hit – not least those in the hospitality sector like restaurants and pubs."
McDonald noted that the drop in footfall associated with successive lockdown measures in the UK has been "devastating" for some businesses, adding that while the horizon looks somewhat brighter, there are still challenges to overcome.
“Looking ahead, there is cause for cautious optimism as we return back to something approaching ‘normality’," he said. "But there are still huge challenges facing the sector including the continued reduced footfall, during weekdays in particular, increased food prices due to the war in Ukraine and the ongoing cost of living crisis forcing consumers to tighten their belts.”
Skills shortages, supply chain issues, the cost of materials and energy and increased competition on the marketplace are all factors that may weigh on businesses as the year progresses.
“There is a lot of pressure on the construction industry generally and we are also seeing problems on the high street in terms of consumer spending, which is not going to improve with inflation running to 9% at present," added Andy Taylor, partner and head of restructuring at Shakespeare Martineau.
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