Pub insolvencies fall by a third

By Martyn Leek

- Last updated on GMT

Related tags: Insolvency, Debt

Further insolvencies on the way, despite a fall so far this year
Further insolvencies on the way, despite a fall so far this year
The number of pub companies collapsing into insolvency dropped by a third in the second quarter of this year, according to a new study by PricewaterhouseCoopers

The number of pub companies collapsing into insolvency dropped by a third in the second quarter of this year, according to a study by PricewaterhouseCoopers (PwC).

Sixty pub operators filed for insolvency in the three months to 30 June, compared with 88 in the final quarter of last year. But, this year's figure is still comparatively high and is up nearly 10 per cent on the 55 that collapsed in the second quarter of 2008.

Restaurant company insolvency levels in second quarter are up 5 per cent in the first three months of the year, but down 30 per cent from their peak of 183 in first quarter of 2009.

The professional services firm also warned there was more pain to come in the eating and drinking out sector.

Further insolvencies expected

David Chubb, partner at PwC, said: “Pub company insolvency rates have fallen from where we were a year ago – but trading remains difficult and further failures are expected as lenders consolidate their positions.

“The insolvency stats do not fully illustrate the extent of the problems in the sector as much underlying restructuring activity continues. Even without entering insolvency creditors may still experience pain.”

He added: “Generally, insolvency rates increase as an economy clambers out of recession - due to working capital pressures. However, as pubs are not vulnerable to working capital any signs of a UK recovery, when they come, will be good news for the pub industry.”

Danger of discounting

Chubb also warned on the increasing propensity of discounting in the restaurant industry.

He said: “While restaurant closures have slowed, both regional and London eateries are still very reliant on promotions and as a result profit margins remain under pressure. Consumers are likely to demand even greater value for money in the coming months as the impact of higher taxes and interest rates take hold.”

Martyn Leek is news editor of BigHospitality's sister publication, M&C Report.

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