‘Another tough quarter’ for hospitality as more than 1,100 outlets lost in Q2

The latest quarterly analysis from CGA by NIQ and AlixPartners reveals that Britain’s number of licensed premises dipped by 1.1% in the three months from April 2023 to June 2023.

In total, 5,736 venues have shut in past year (July 2022 to June 2023), meaning Britain has lost around one in 18 of its licensed premises in the last 12 months.

The current closure rate means that about 5% of the market is closing annually and that since March 2020, the market has seen an astonishing figure of close to 15,000 outlets close – as measured by on-premise licenses.

Smaller businesses have borne the brunt of closures, and the independent segment has shed 7.0% of outlets in the last 12 months — in sharp contrast to fractional growth of 0.1% in the managed hospitality sector.

“These figures clearly demonstrate the challenges faced by hospitality businesses,” says Kate Nicholls, chief executive of UKHospitality.

“In particular, smaller independent businesses, who have borne the brunt of the ongoing challenges of soaring costs, workforce issues and more.

“Alongside the increased rate of business failure across the independent market, there has been an industry-wide freeze on investment and new openings due to the current crisis, providing a very constrained short-term outlook.”

Despite the gloomy figures, 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 notably fewer closures than the sector as a whole.

Britain’s city centres, meanwhile, are showing growing resilience, with a 4.2% net fall in licensed premises in the 12 months to June 2023 — a better figure than 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.

“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,” says Karl Chessell, CGA by NIQ’s business unit director - hospitality operators and food, EMEA.

“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.

“More venue closures are sadly inevitable while costs remain so high, but the outlook for well-resourced, distinctive and customer-focused groups remains good.”