Reports from the hospitality sector have shown a significant increase in the number of pubs closing, amidst challenging circumstances. The data, from accountancy firm UHY Hacker Young, is based on a year-on-year comparison of the number of insolvencies for pub firms and it shows a 180% increase in the last 12 months.
There are various influences driving the downturn in pub revenues, some of which are lifestyle related whilst others may be external factors beyond the control of landlords and the pub chains.
Covid obviously created a significant shift in people’s views around socialising in communal spaces and the extended period of lockdown led many to find alternative means of socialising with friends. The result is we now see a mix of smaller gatherings, in slightly less populated venues, such as restaurants or at home, whilst some will actively shy away from time in busy spaces – namely pubs – at all.
Despite research suggesting that alcohol consumption actually increased in the covid period, the majority of this remained ‘indoors’ at home and this is where it appears to have stayed. But there is also a longer term shift being witnessed with the younger generation seemingly less interested in the pub and club scene, preferring instead virtual meet ups, exercise at the gym and activity based get togethers.
It’s fair to say that 2022 also presented a large number of financial obstacles to pubs, primarily around the reaction of the economy to global issues, but also down to domestic policy. Many city centre operators are citing the rail strikes, which clustered around the festive season, as a major contributor to their issues – having hit revenues during what is traditionally their best trading period.
But strikes merely compounded the problem around the cost of living and the second half of 2022 was when it really began to bite. Rising household costs, fuel, energy, food and drink along with double digit inflation hit disposable incomes and it now appears the hospitality and leisure trade has paid the price.
With little room for manoeuvre, nobody is expecting the Chancellor to pull a rabbit out of the hat come the March 2023 budget, but there may be some concessions for operators around rates and duty if there is any spare change in the accounts.