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UK government increases number of alcohol licenses despite post-budget concerns

According to a new survey by CGA by NIQ and AlixPartners, the number of high street pubs increased by 3.8% in Q3, while community pubs showed a small increase of 0.4%.

“There are now 12% fewer community pubs than there were before Covid, but the number rose by 0.4% between June and September. The high street pub segment measured by the Tracker is meanwhile 3.8% larger than just three months ago,” the report stated.

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Moreover, the latest increase brings Britain’s total licensed premises to 99,868 –virtually level with the figure 12 months ago.

However, CGA’s Hospitality Market Monitor also noted that “confidence for continued growth has been stifled by the government’s Autumn Budget, which added to hospitality’s heavy burden of costs with an increase in employers' National Insurance contributions and a cut in business rates relief.”

Meanwhile, recent data published by the Office for National Statistics (ONS) showed that profitability is being eroded by spiralling wage costs, as industry leaders continue to lobby the government for additional support and business rates relief.

“Hospitality’s recovery is particularly fragile in the independent sector, which has been weakened by Covid-19 and high inflation and is now 15.9% smaller than it was in March 2020. After contracting every quarter for four years it has now been in growth for two quarters in a row, and site numbers increased by 0.7% in the three months to September, but these added costs now put the revival of small businesses and start-ups in doubt,” said a representative from CGA by NIQ.

Karl Chessell, CGA by NIQ’s business unit director – hospitality operators and food, EMEA, commented: “Two successive quarters of growth in site numbers is an encouraging sign of hospitality’s strength in the face of major challenges. While the sector is smaller in outlet terms than before Covid, the last six months have shown that hospitality groups, investors and entrepreneurs have been confident enough to be opening rather than retrenching.

“With inflation, GDP and other economic indicators moving in the right directions, the sector should be looking forward to 2025 with guarded optimism. However, with substantial extra costs on labour and rates now looming, there is a real danger that hospitality’s momentum will be lost.”

Graeme Smith, MD at AlixPartners, added: “In the absence of a Budget that brought the spectre of more challenges for the hospitality sector, these latest findings would have provided some cause for optimism. Two successive periods of quarter-on-quarter growth in site numbers – a key proxy for the health of the sector – demonstrates an impressive resilience, and signalled some very welcome stability for the industry.

“However, significant challenges remain; the plans set out in the October 2024 Budget mean we must view these latest figures through an extremely cautious lens. The hope is that the positive momentum of the past six months will not entirely stall, and that the sector will continue to recover. There is the hope that the increase in the National Living Wage may encourage customers to spend more and businesses should look to benefit from this while it lasts. With many businesses now looking to further consolidate their estates, market flux and churn may well create more opportunities for others.”

• CGA
• pubs
• hospitality
• on-trade community