More than one in ten British pubs at risk of closure

By James Bayley

Published: 08 October, 2024

More than one in ten British pubs are at imminent risk of closure, with 11% of the UK’s pubs classed as technically insolvent and facing maximum credit risk, according to analysis by accountancy firm Price Bailey.

Price Bailey reviewed the credit risk scores and balance sheets of all 37,961 pubs and bars across the UK. It found that 7,445 establishments (20% of the total) have negative net assets, meaning they are technically insolvent. Among these, 4,310 pubs are categorised as having a Maximum Risk score, up from 3,380 a year earlier.

“The number of pub closures in the first six months of 2024 matched last year’s record, and there are few signs of improvement,” said Matt Howard, head of the insolvency and recovery team at Price Bailey. “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.”

Read more: Top 50 Drinks Wholesalers 2024 – The full rundown

The analysis indicates that 769 pubs went out of business in 2023, a 48% rise on the previous year’s 518 insolvencies. The trend continued into 2024, with 378 insolvencies in the first half of the year – matching the figure for the same period last year, the highest total for the first half of any year since 2013.

Price Bailey highlights that pub closures are being driven by high energy, labour and wholesale costs. At the same time, disposable income has struggled to keep pace with inflation. The Bank of England’s interest rate, which began 2023 at 3.5% and peaked at 5.25%, remains a burden on many pub businesses, even after being cut to 5% in August.

“Even when pubs see improved turnover, wage costs mean that many remain in the red for large parts of the trading week,” added Howard. “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.”

Staff shortages have also affected the pub industry, leading to reduced opening hours and limited kitchen services. This has hindered many pubs’ ability to meet demand during busier periods, further impacting profitability. Despite the challenges, Howard notes a shift in the market, with some new types of pubs thriving: “Innovative new entrants such as pubs owned by craft breweries, and theme pubs like the Boom Battle Bar chain, are successfully shaking up the industry.”

Large pub chains and independent establishments have been hit hardest, with Wetherspoons closing 41 pubs in 2023 and expected to shutter at least another 24 before the end of this year.

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