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On-trade closures tally one an hour as economic crisis bites

Published:  20 October, 2022

Hospitality has lost 2,200 licenced venues in three months as crippling costs and staffing issues continue to hit business operators.

The stark figures, from the latest CGA and AlixPartners Hospitality Market Monitor, show a net decline of 2.1% licenced premises between June and September, equating to a pub, bar, café, restaurant or hotel closing every hour of every day.

Despite a return of some stability to the sector post-Covid, when site numbers returned to near pre-Covid levels by June 2022, this new, steep decline represents a contraction to 9.9% fewer sites over levels in March 2020.

Beneath the headline figures, an even harsher picture emerges for independent operators, which suffered far more than managed groups.

Some 1,751 independent outlets closed in the past three months, a contraction of 2.6%, set against a small rise of 0.9%, or 179 venues, of managed sites.

Nightclubs have also been particularly harshly hit, with a 5.6% contraction in outlets in the last three months, down by 309 venues.

The report highlighted the contrasting ability of larger groups, with greater resources and buying power, with the plight of smaller operators, many of which are now in a “fragile” financial position.

The pain has also been spread fairly evenly across high street, suburban and rural locations, according to the Market Monitor, with all experiencing a 2.1% decline.

However, regional variations have emerged, with a decline of 1.6% in the south and south-east rising to 2.9% in Scotland.

“These numbers show how hospitality’s steady recovery from Covid is now under severe threat from rising costs for businesses and consumers alike,” said Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA.

“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.”

Chessell also called on government to add to the “welcome” relief on energy bills with a sustained and clear policy to help hospitality “power the economic growth that the government is chasing”.

UK Hospitality chief executive Kate Nicholls added: “Prior to the pandemic, hospitality was the only sector due to generate real term growth and before the energy crisis hit it was forecast to grow 3%. 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.”