800 licensed venue closures in Q4

6 February, 2024

The latest Hospitality Market Monitor from CGA by NIQ and AlixPartners reveals a 0.8% decline in Britain's licensed premises during the fourth quarter of 2023.

This translates to 803 net closures in three months, or nearly nine closures daily. While this marks an acceleration from the 0.3% decline in the third quarter of the previous year, it signifies a marked improvement from the peak of post-Covid business failures in mid-2022, where an average of 24 closures per day were recorded.

Karl Chessel, CGA by NIQ’s business unit director – hospitality operators and food, EMEA, said:

“Given all the pressures on hospitality in recent months, it is no surprise to see more contraction in site numbers in late 2023.”

This data follows a recent report by full-service law firm Shakespeare Martineau, indicating a nearly doubled number of hospitality businesses filing for administration over the past two years.

As of December 2023, Britain had 99,113 licensed premises - almost 3,000 fewer than the previous year and a staggering 16,000 fewer than in March 2020 when Covid-19 first struck. The independent sector has been hit hardest, witnessing a 16.6% decline since the onset of Covid-19 in early 2020.

Graeme Smith, Alix Partners’ managing director, commented:

“Prevailing economic conditions meant 2023 was a difficult year for many hospitality and leisure businesses.

However, it was and clearly remain an uneven market. Well capitalised, well-run establishments in resilient parts of the market enjoyed continued growth through 2023, whereas smaller independent businesses struggled to absorb the increase in operating costs.”

The Hospitality Market Monitor places an emphasis on the pub sector, revealing a 43.6% decrease in premises over the past two decades. While food-led pubs have shown resilience with a 7.6% drop since March 2020, community and high street pubs have declined by 11.8% and 11.2% respectively, reflecting evolving consumer habits.

Managed pub groups have seen growth of 4.2% during this period, while independents (down 14.1%) and leased operators (down 14.4%) have faced greater challenges in recovering from Covid lockdowns.

Graeme Smith added:

“While the long-term headline-grabbing pub closure rates are on the face of it shocking, they speak to a societal shift, from drinking-out to more food-led occasions.

This has happened amid a 20-year structural expansion in food venues across the country. It is a hospitality mega-trend of the first quarter of this century.

The other material shift in behaviour in recent times is that of young consumers moving away from large late-night venues, which has left this segment of the market facing a challenge to adapt.”

Forecasts suggest further closures in the coming months as inflation and labour issues persist, with independent operators being particularly vulnerable.

Despite these challenges, CGA's data indicates 'solid trading' for managed pubs, bars, and restaurants, with anticipated drops in inflation and interest rates hopefully alleviating costs and boosting consumer spending as 2024 progresses.

Karl Chessel commented:

“Whether or not this leads to a slowing of closures and a trigger for new openings remains to be seen.”

Source: Restaurant Online UK

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