Analysis by Price Bailey shows that a tenth of all UK pubs are at risk of closure, with one in five classified as technically insolvent.
The study examined the credit risk scores and balance sheets of 37,961 pubs, finding that 7,445 have negative net assets, making them vulnerable to bankruptcy. Notably, 4,310 pubs are at maximum risk, an increase of 930 from the previous year, with 769 pubs entering insolvency last year.
The data shhowed that around 11% of all UK pubs have negative net assets and maximum credit risk score, with insolvencies jumping 12% year-on-year,
Price Bailey analysed the credit risk scores and balance sheet information of all 37,961 pubs and bars in the UK. The study found that 7,445 around 20% of the total population have negative net assets on their balance sheets. This is an increase of 930 from 12 months ago, when 3,380 pubs were classed as both technically insolvent and in the maximum credit risk category, representing nine per cent of the total number of pubs.
Matt Howard, Head Insolvency and Recovery team at Price Bailey, said “The number of pub closures in the first six months of 2024 matched last year’s record and there are few signs of improvement. More than one in 10 British pubs are technically insolvent and at imminent risk of collapse.
“These businesses will find it almost impossible to access extra funding unless the owners provide personal guarantees, which few are likely to do in the current climate.
“The inflation rate for pubs remains stubbornly above the core rate with little sign of relief. If the Government announces an inflation-busting hike to the minimum wage in the Autumn Statement, many pubs that are currently on life support are likely to flatline.
“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. Even when pubs see improved turnover wage costs mean that many pubs remain in the red for large parts of the trading week.”
“Many pub businesses have a legacy of barely serviceable levels of debt since the Covid lockdowns. August’s rate cut has taken some pressure off but if the National Living Wage gets a hefty increase, which feeds through to inflation, this could delay further rate cuts.”
“Pubs are still restricting opening hours due to staff shortages, rising overheads and declining footfall. Many are having to sacrifice long term customer relationships on the altar of profitability as they focus on the busiest hours.”
“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.”