Pub insolvencies hit ten year high

Data from Price Bailey has revealed that 769 pubs were forced to close their doors permanently, marking a significant 48% increase from the 518 closures in 2022, the highest number in over ten years.

The surge in insolvencies underscores the growing pressures on the pub sector, with the total count dropping to 38,175 from 41,015 a decade ago. Price Bailey said the final figure was likely to be higher, as more pubs would have been closed by multi-site groups that did not enter insolvency.

There were 38,175 pubs in the UK at the end of 2023, down from 41,015 a decade earlier.

Data obtained by Price Bailey under the Freedom of Information Act also revealed there were on average 2.1 pub closures per day in 2023, up from 1.4 per day in 2022.

The closures were accelerated by issues such as soaring costs across the board, customers struggling with lower disposable income, train strikes and high interest rates, which hit 5.25% by the end of the year.

The government’s £18 billion energy support package for businesses also tapered away towards the end of Q1 2023, which aggravated cost pressures for publicans.

However, despite the persistent closures among large pub chains and small independent pubs, Price Bailey said independent craft breweries and themed pubs with a competitive socialising element were generally proving more resilient.

Matt Howard, Head of the Insolvency and Recovery team at Price Bailey, said  “2023 saw the highest level of pub failures in over a decade. While there are some glimmers of hope, underlying trading conditions remain challenging and rising labour costs continue to exert strong pressure on margins.

“The inflation rate for pubs crept up again in January and hopes of an early rate cut appear to be receding. The first quarter is a much slower trading period for pubs, and while sales growth was impressive in December many pubs are struggling to turn a profit.

“Many pub businesses piled up barely manageable levels of debt during the pandemic lockdowns and rate hikes are tipping an increasing number into the red. The longer rates stay at current levels, the more pubs are likely to close their doors for good.

“Workers in the pub trade have been among the chief beneficiaries of rises to the National Living Wage, which has been hiked by over 40% in five years. Higher wage costs mean that many pubs remain in the red for large parts of the trading week.

“Even though many of the large pub chains and independent pubs are struggling, innovative new market entrants, such as pubs owned by craft breweries, and theme pubs, such as the Boom Battle Bar chain, are successfully shaking up the industry.”