It’s a familiar narrative: People are working from home, online business is booming, and physical retail is struggling.
But brick-and-mortar hospitality businesses have it particularly bad right now, according to the latest Business Risk Index (BRI) from CreditorWatch. Last month saw hospitality insolvencies hit 9.3 per cent in the 12 months to February 2025 – a record high. Businesses in CBDs have been hit particularly hard, according to the BRI, as more people work from home and shop online.
According to CreditorWatch, food and beverage businesses are crumbling under the pressure of rising costs, including energy and insurance price hikes and higher rents.
ISB recently reported on the soaring cost of business insurance in NSW: 78 per cent of businesses there have seen double-digit increases in their insurance premiums over the past year.
Beyond the cost of insurance, rent, and utilities, wage and food-price increases have also caused hospitality insolvencies to skyrocket, the BRI revealed.
In fact, insolvencies rose across the board last month after dipping in December and January. CreditorWatch CEO Patrick Coghlan says that harsh new trade policies from the US are not helping matters.
“The expected slowdown in economic growth from the widespread US tariff regime will, unfortunately but inevitably, result in higher insolvencies,” he said. “After a tough couple of years managing higher inflation, interest rate increases and lower demand, I certainly hope Australia businesses are spared the worst of it.”
Despite signs of economic recovery, CreditWatch’s Chief Economist Ivan Calhoun doesn’t expect insolvencies to slow down any time soon.
“Given the economic and cost pressures and continuing high levels of accumulated ATO tax debt, it’s too early to expect the level of insolvencies to reduce much in the period immediately ahead,” said Calhoun.
