Pubs are closing at the quickest pace in a decade, according to analysis by Price Bailey which shows 620 shut in the year to the end of March.
The rate of closures, marks a 68% increase from the 369 failures in the same period last year. In the first three months of 2023, 200 pub companies went under. The situation has the potential to get even worse with rising interest rates leaving businesses in the restaurant sector unable to meet loan repayments.
However, separate data from National Statistics commissioned by Price Bailey has revealed that optimism among publicans is on the rise despite the surge in business failures. Twice as many British pubs (35%) are now reporting turnover is rising rather than falling (16%), a dramatic improvement on six months ago when just 7% were reporting rising turnover compared to 58% saying takings were down.
Despite the emergence of positive signs for the pub trade, a sizeable number of pubs (22%) are still operating reduced trading hours due to difficulties finding staff, although there has been a modest improvement since the end of 2022, when 29% reported reduced trading hours.
The survey of 235 UK publicans, some of which operate across multiple sites, also reveals that 61% of pubs are considering increasing prices to cover energy costs, down from 75% at the end of last year, while 50% and 36% are looking at raising prices to cover increased raw material and labour costs respectively, down slightly from 54% and 45% six months ago.
Looking ahead to the next 12 months, 20% of pub owners are expecting business performance to improve while 16% think it will worsen, a dramatic improvement from December 2022 when more than twice as many publicans expected performance to worsen than improve (40% compared to 16%).
Matt Howard, Head of the Insolvency and Recovery Team at Price Bailey, said “While there are early signs of an improvement in trading conditions for pubs, insolvencies in Q1 reached the highest quarterly level in over a decade. The improving economic outlook may come too late for many pub businesses which have accumulated unmanageable levels of debt over a testing few years.”
“There is often a lag between a return to more robust economic activity and declining insolvencies. Banks will likely start to put increasing pressure on debtors to perform or pay off loans. Focus will start to shift from financially stressed businesses to startups and those with better prospects, which may mean that insolvencies continue to rise despite many pubs seeing improved takings.”