British hospitality loses one in 18 sites in last 12 months

26 July, 2023

The new Hospitality Market Monitor from CGA by NIQ and AlixPartners has revealed that in the last 12 months, Britain has lost around one in 18 of its licensed premises, 5,736 pubs, hotels, restaurants, bars and cafes.

The current closure rate means around 5% of the market is closing annually, and since March 2020, the market has seen a figure of close to 15,000 outlets close, as measured by on-premise licences.

Karl Chessell, CGA by NIQ’s business unit director, said:“It’s been another tough quarter for hospitality, with soaring energy, food and labour costs squeezing businesses’ margins and inflation and interest rate rises sapping consumer confidence. 

"Against that backdrop, managed groups have been resilient in many segments and areas, and there are welcome signs that city centres in particular are back to their pre-Covid vibrancy. More venue closures are sadly inevitable while costs remain so high, the outlook for well-resourced, distinctive and customer-focused groups remains good," Chessell added.

The analysis also reported that Britain’s number of licensed premises dipped by 1.1% (April-June 2023), representing 1,139 net closures in the second quarter, equivalent to 12.5 per day, due to high costs for businesses and consumers.

Smaller businesses have felt the brunt of the closures, and the independent segment has shed 7% of outlets in the last 12 months, in contrast to fractional growth of 0.1% in the managed hospitality sector.

However, the Hospitality Market Monitor also reveals signs for cautious optimism. Net closures across the first half of 2023 (1,895) were less than half the number seen in the second half of 2022 (3,841), and some units vacated recently have been repurposed by other operators including emerging groups. 

The casual dining segment is now 5.6% smaller than 12 months ago, but food-led pubs (down 2.9%), high street pubs (down 3.1%) and community pubs (down 4.1%) have all recorded fewer closures than the sector as a whole.

Graeme Smith, AlixPartners’ managing director, said: “While every business lost is a tragedy, many more are managing to navigate their way through. We are all waiting for this margin-compression cycle to turn, and when that switch comes, the market will, from an investment and lending perspective, right itself quickly. Investors will return, with businesses that have delivered stability and are able to demonstrate growth, top of the agenda.”

Britain’s city centres are showing growing resilience, with a 4.2% net fall in licensed premises in the 12 months to June 2023, compared to the drops of 5.9% and 5.4% in large and small towns respectively. 

It follows a steady return of commuters and visitors to major hubs, and an increase in residents in central areas of many of the country’s largest cities, in recent years. 

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