An estimated one in eight UK pubs are still on the verge of insolvency, with 181 collapsing in the final three months of 2025 alone as rising costs and weaker demand continue to hit the sector.
With many pub owners facing tough decisions, the insolvency practitioners Liquidation Centre have shared practical steps pubs and hospitality sector businesses can take now to regain control and reduce the risk of closure. Richard Hunt, Director of Liquidation Centre provides expert insights into the actions pubs and hospitality businesses should consider before pressures become unmanageable.
Five practical steps pubs and hospitality owners can take now to limit insolvency threat
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Carry Out Cost Audits
A cost audit is one of the most vital steps pubs and hospitality businesses can take now to get a grip on their spending. Cost audits can help examine and identify where money is being lost, whether that’s on utilities, stock, or outdated supplier contracts. It is the perfect opportunity to separate essential costs from outdated habits and expenses. By doing this, owners can reduce wasteful spending, refine ordering, and gain a clearer picture of where the business stands.
Richard Hunt, Director of Liquidation Centre adds: “For pub owners, margins are tighter than they have been in years. No one opens a pub expecting to worry about insolvency, but the sooner you take a close look at the numbers, the more control you keep. A cost audit can reveal where money is slipping away and fix those pressure points before they spiral.”
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Conduct Regular Pricing Strategies
With rising costs continuing to put pressure on the sector, pricing strategies are crucial in ensuring owners are protecting profitability. Regularly reviewing product prices enables pubs to ensure their profit margins align with rising business costs, without alienating consumers.
“Small, meaningful adjustments such as introducing premium menu offerings or rebalancing prices across the menu can boost profitability without impacting every product. Pricing strategies that are clear and well executed help pubs respond more confidently to market pressures, rather than reacting too late, when steep price changes could result in damaging customer trust.”
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Examine and Renegotiate Leases
Managing fixed costs can be even more important than trying to boost sales, especially at a time when consumer confidence and spending are under pressure. When revenue drops and supplier costs rise, fixed expenses like rent can quickly start to feel overwhelming.
“Taking a close look at lease costs can open the door to renegotiation and give businesses more breathing room. It’s a practical step that can ease pressure on overheads and help pubs stay resilient during tougher trading periods, while building a bit of financial headroom.”
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Explore Alternative Revenue Streams
Pubs rely heavily on drinks sales, but during times of economic uncertainty, customers tend to spend less, putting pressure on their main source of income. That’s why adaptability is vital. Pubs that are willing to explore and diversify revenue streams stand in better stead to cope with economic pressures.
“Transforming the pub into a space that offers more than just drinks can open up new income streams. Quiz nights, daytime co-working offers, lunch deals, or even selling local products can all bring in extra revenue and attract a broader mix of customers.”
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Engage Early With Lenders and Advisors
During difficult trading periods, waiting until it is too late to act is one of the most common and biggest mistakes businesses make. Delaying those difficult conversations only increases the pressure and reduces the likelihood of coming out the other side. By speaking to advisors and lenders at the first signs of trouble, more options are likely to remain available, including restructuring support. Lenders are also generally more willing to work with businesses that are proactive and transparent about their position. Continuing to trade as normal while knowingly facing insolvency can also expose owners to personal liability and reputational damage.
“Insolvency practitioners and advisors can bring experience most operators simply don’t have in-house. From cash flow forecasting to landlord negotiations, the key is knowing whether the business is facing a short-term liquidity problem or if there’s a deeper profitability issue. This can help to differentiate between a business that may simply have a temporary liquidity problem, one which may need restructuring, or a business with profitability issues. All of these need to be tackled in a unique and accurate way, making this distinction vital.”
Richard Hunt, Director of Liquidation Centre reveals further advice and emphasises the importance of acting early:
“Alongside the above, struggling pubs and hospitality firms may also consider menu engineering and stock optimisation. This can boost the pub’s basic foundations by reducing wasteful spending on unprofitable items and focusing more on high-margin, popular drinks/dishes that support cash flow. With business costs remaining high for many establishments, making sure stock and resources are used effectively can play an important role in reducing the risk of insolvency.
“Another key area to keep under control is staffing. Smart staffing solutions and choices can keep a business afloat in a tough climate. Keep workforce capacity in line with customer demand and regularly analyse payrolls to keep this manageable. At the same time, it’s important not to compromise on service quality, as maintaining a loyal customer base is vital during challenging economic periods. Above all, never ignore any financial warning signs. Acting early can make all the difference, while leaving it too late may result in insolvency that could have been avoided.”