NO LESS than 5736 UK pubs, hotels, restaurants, bars and cafes have succumbed to economic pressures over the last 12 months, according to the latest Hospitality Market Monitor from CGA by NIQ and AlixPartners.
Equivalent to a wastage rate of one from every 18 licensed currently licensed premises, the latest figures compound the UK closure tally amassed since March 2020, which now stands at close to 15,000 outlets.
In the most recent quarter, the three months from April 2023 to June 2023, the number of licensed premises dipped by 1.1%, representing 1139 net closures, equivalent to 12.5 per day countrywide.
CGA by NIQ and AlixPartners blamed ‘relentlessly high costs for businesses and consumers alike’, which have felled many venues already weakened by COVID-19, and said that smaller businesses have borne the brunt of closures, with the independent sector shedding 7% of outlets in the last 12 months—in sharp contrast to fractional growth of 0.1% in the managed hospitality sector.
However, the new report also notes that the net closures across the first half of 2023 (1895) were less than half the number seen in the second half of 2022 (3841), and some units vacated recently have been repurposed by other operators including emerging groups.
CGA by NIQ business unit director Karl Chessell 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 impressively resilient in many segments and areas, and there are welcome signs that city centres in particular are back to their pre-COVID vibrancy,” he claimed.
“More venue closures are sadly inevitable while costs remain so high, but the outlook for well-resourced, distinctive and customer-focused groups remains good.”
AlixPartners’ managing director, Graeme Smith, added: “It is clearly a very difficult time for some hospitality businesses right now, as these latest numbers illustrate. But part of the story here is the remarkable resilience and robustness of large swathes of the market in the face of a challenging, high-inflation environment.
“Despite the current cost-of-doing-business crisis, which has served to squeeze profitability, suppress investment and, in the worst scenarios, challenge viability, a number of segments of hospitality and leisure are holding up extremely well. And this, in a market that was already challenged and in recovery mode after the events of the past three years.
“While every business lost is a tragedy, many more are managing to navigate their way through,” said Mr Smith. “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.”
He predicted: “Investors will return, with businesses that have delivered stability and are able to demonstrate growth, top of the agenda.”
