Businesses have struggled with rising bills

More than a dozen hospitality venues closed every day over the past 12 months as businesses struggled with rising costs.

The sector suffered a net decline of 4,593 or 4.3% of licensed premises in the year to March, an average of 12.6 per day, with independent businesses bearing the brunt of the closures with a 5.9% drop while managed groups grew by 1.5%.

In the three years since the start of the COVID-19 pandemic, the independent sector has shrunk by 14.1% – more than four times the contraction of 3.3% in the managed sector.

It reflects both the vulnerability of small, mostly family-run businesses in the face of COVID and the cost of living crisis, and the resilience of better resourced pub, bar, restaurant and hotel groups.

There has been a 30.6% contraction in the nightclub sector since March 2020.

However, more encouraging news from the Hospitality Market Monitor from CGA by NIQ and Alix Partners indicates the rate of closures has slowed in the last quarter. Net closures slowed to 756 venues in the first three months of this year—a quarter-on-quarter drop of 0.7%, and equivalent to 8.4 closures a day.

The 12-monthly figures show a much steeper drop in restaurants (down 7.8% since March 2022) than food pubs (down 2.2%) and high street pubs (down 2.5%).

Graeme Smith, AlixPartners’ managing director, said: “While the number of pubs, restaurants and other licensed venues continues to contract in UK hospitality, there is some positivity in this latest analysis of the market, given that the overall cadence, or rate of decline, has slowed significantly.

“Underpinning this is the fact that the rate of closures in all major cities is reducing, as COVID-19 concerns subside, and workers and tourists steadily return to urban centres – even to a degree, on Mondays.

“It’s clear that many of Britain’s city centres are returning to something comparable to their pre-covid vibrancy.

“Tellingly, this latest study underlines the growing divide between larger and smaller operators, reflecting the varied ability to withstand the continued headwinds the sector faces.

“The closure rate of independent businesses – the lifeblood and entrepreneurial driving force of the sector – continues to vastly outstrip the better-funded corporates and the branded operators. It highlights the need for government support to be extended, especially on energy costs, if small (often family-owned) businesses are to survive.

“On a 12-month view, the number of closures is still very significant. A statistic homing into view is that by the end of the year, the total number of licensed venues is likely to fall below 100,000 for the first time in many decades.”