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Britain’s hospitality sector saw a net decline of one closure every hour in the third quarter of 2022, including hotels, pubs, bars, restaurants and cafes, according to the latest Hospitality Market Monitor from CGA and AlixPartners.
The closures over the last quarter follow a “sharp rise” in prices in energy, food and labour. Overall, there were just under 104,000 licensed premises at the end of September 2022, a net drop of 2,230 since June.
This represents an average of just over 24 closures a day, or more than 150 per week, and leaves the licensed market with -9.9% fewer sites than March 2020.
While the number of managed sites is 3% below pre-Covid levels, it increased by 0.9% (+179 sites) in the last three months, but the independent sector contracted by 2.6% (-1,751 sites).
CGA said this reflects the greater resources and buying power of larger businesses compared to smaller firms, many of which are now very fragile.
High street, suburban and rural locations all recorded the same net decline of 2.1% in licensed premises between June and September. By region, quarter-on-quarter declines varied slightly, from a low of 1.6% in the south and south east to a high of 2.9% in Scotland.
Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA, said: “The resilience and confidence of managed groups and their investors is impressive, and people’s appetite for eating and drinking out is undimmed. However, thousands of smaller businesses are now on a knife-edge and in need of financial support.”
Graeme Smith, managing director at AlixPartners, added: “Given that this decline is already happening before an expected slowdown in consumer spending, it is reasonable to conclude that without increased support from government the closure rate will in all likelihood accelerate.”
Kate Nicholls, UKHospitality chief executive, said: “It’s clear the economy needs hospitality to be firing on all cylinders and, while the government’s energy support package was very welcome, there now needs to be considered and urgent action to ensure businesses can survive. This should include business rates reform and lowering the rate of VAT.”
