New research has found that the UK pub sector endured its most severe period of closures in a decade this year, with 408 venues shutting their doors between April and September, while one in eight of those remaining are now at risk of insolvency.
Research undertaken by accountancy firm Price Bailey has found that the UK pub sector endured its most severe period of closures in a decade this year, with 408 ceasing to trade between April and September.
The number of venues currently operating with negative net assets also rose 14 percent to 4,752, as the hospitality industry continues to struggle with skyrocketing employment, supply and utility costs.
“We’re seeing a sustained rise in insolvencies through Q2 and Q3, not just a one-off spike,” said Price Bailey’s head of insolvency and recovery, Matt Howard. “The combination of rising payroll costs, energy prices, and inflation is proving fatal for pubs operating on thin margins.”
“It’s not just pubs feeling the pinch – consumers are too. Tax rises are eroding disposable income, leaving households with less to spend on leisure. That’s a double hit for pubs: rising costs on one side and falling footfall on the other.”
The figures represent a reversal of what insolvency journal Credit Connect described as “a tentative recovery” during the first months of the year, with April’s tax rises representing a tipping point for many businesses.
The first quarter of the year saw 161 establishments become insolvent, which rose to 219 in the second quarter, and dipped slightly to 189 in the third, with 84 pubs becoming insolvent in June alone, which Credit Connect noted was “the highest monthly total in over a decade.”
Price Bailey’s research highlighted that pubs are “highly vulnerable to cash flow insolvency,” and face “significant barriers to accessing finance without personal guarantees,” with dozens more predicted to be handed winding-up petitions or dissolution notices within the next 12 months.
UKHospitality warned that further tax increases in this month’s Budget could add another £2.9bn to business costs, potentially jeopardising 111,000 jobs.
“Hospitality is being taxed out and the sheer scale of cost increases hitting the sector is forcing businesses to make tough decisions to cut jobs, raise prices, slash investment and reduce hours,” said CEO Kate Nicholls.
“We stand ready to work together on solutions that can reverse the damage already done and help hospitality thrive, not just survive.”
Taken from both sides
Price Bailey said… “It’s not just pubs feeling the pinch – consumers are too. Tax rises are eroding disposable income, leaving households with less to spend on leisure. That’s a double hit for pubs: rising costs on one side and falling footfall on the other…
