Food and drink industry administrations surge 60% in H1
Greater London led the way with 22% of the filings, followed by the South East (17%) and North West (15%)
The number of administrations filed for businesses in the food and drink industry surged 60% year-on-year between 1 January and 30 June 2022 (H1 FY21), according to analysis by Shakespeare Martineau.
Overall, the food and drink industry accounted for 6% of administrations in the first six months of the year. More than 620 businesses entered administration – 39 of which came from the food and drink industry, including several breweries and restaurant chains.
Greater London led the way with 22% of the filings, followed by the South East (17%) and North West (15%), data from The Gazette Official Public Record has revealed.
While January was the quietest month with 55 administrations, the figure jumped to 140 in March before dipping to 120, 93 and 104 in April, May and June respectively.
Shakespeare Martineau said it anticipates that banks will review their portfolios and could take a “more cautious” approach to lending decisions in the short to medium term.
Matt McDonald, partner and food and drink sector lead at Shakespeare Martineau, said: “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.
“Looking ahead, there is cause for cautious optimism as we return back to something approaching ‘normality’, 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.”
Andy Taylor, partner and head of restructuring at Shakespeare Martineau, added: “There are a lot of businesses with endemic problems they have been sitting on for months and, in some cases, years. If things continue as they are, we expect to see an increase in business failures as they attempt to address their underlying issues and battle tough trading.
“There are many businesses in a state of flux and for them to survive longer term, they will need to act now to address underlying issues. Taking a proactive approach can help directors to keep their business afloat. I cannot overstate how important it is to get to grips with matters at the earliest possible juncture.”
