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London's hospitality sector ‘more stable’ in 2023

The Hospitality Market Monitor from CGA by NIQ and AlixPartners shows that central London saw a net decline of 540 licensed premises in the three years between March 2020 and March 2023 – 15.6% of the city’s pre-Covid total and the equivalent to one closure every two days.

The heavy toll illustrated London’s dependence on commuters and domestic and overseas tourists for hospitality visits. With millions of people working from home and international travel severely restricted in 2020 and 2021, many pubs, bars and restaurants, especially those in the independent sector, became unsustainable.

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However, the return of office workers and visitors since 2022 has allowed some London venues to reestablish themselves. The research indicates the capital saw a net decline of only 1.0% of its licensed premises in the first quarter of 2023, after a dip of just 0.2% in the fourth quarter of 2022.

This improving picture is reinforced by figures from the Coffer CGA Business Tracker, which has shown that year-on-year sales growth for managed operators within the M25 has been around twice as high as in the rest of Britain over the first few months of 2023.

London’s city centre is by far hospitality’s most concentrated and significant market in the UK, with nearly 3,000 licensed premises, more than Britain’s six next biggest city centres combined.

Karl Chessell, CGA’s director for hospitality operators and food, EMEA, said: “This slowdown of closures is a very welcome sign for London’s hospitality scene, which was disproportionately hit by Covid lockdowns and working from home. London businesses still face some daunting challenges including high inflation and labour shortages, and more closures can be expected, but it’s clear that the sector is back on its feet.”

Graeme Smith, MD at AlixPartners, said: “This stabilisation of such an important hospitality market is encouraging and clearly underpinned by a return of significant footfall to central London. We may see ongoing closures as more vulnerable and indebted businesses succumb to the demanding trading environment. However, we know that London remains a highly attractive market in the longer term, for strong operators with well-defined and differentiated propositions. As inflationary cost pressures ease, we would expect to see the capital return to site growth, possibly as soon as the third or fourth quarter of this year.”

Meanwhile, CGA by NIQ's latest Hospitality at Home Tracker, which tracks takeaway and delivery sales through managed restaurant groups, shows that demand is starting to stabilise following 18 months of decline. In May, sales were just 1% behind the same month in 2022, accounting for around 15% of total sales.

However, with adjustments for inflation sales by value were substantially behind those of a year ago in real terms.

In May, the drinks percentage share of monthly delivery and takeaway sales was 9.4%.

• CGA
• hospitality
• London