Over 200 pubs close in three months

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(Last updated )

The number of pubs closing their doors reached a record high in the second quarter due to food inflation, staff shortages and energy costs

Some 223 pubs went bust from April to June, up from 200 in the first quarter. This was largely due to several adverse factors, including high energy, labour and wholesale food and drink costs, showed analysis by Price Bailey.

At the same time, the disposal income of pub-goers continued to decline, as many were hit hard by the cost of living crisis.

Over the last 12 months, 729 pubs closed permanently, representing an 80% increase on the previous year, which stood at 405.

Matt Howard, head of the insolvency and recovery team at Price Bailey, said: ‘Pub closures are rising at a rate unheard of in more than a decade. We are seeing a perfect storm of high inflation and interest rates at a time when many pubs are on life support.

‘Aggressive interest rate hikes this year have really turned the screw just when it looked like the economy was stabilising. Many pub businesses have piled up barely manageable levels of debt over a testing few years and rate hikes are tipping an increasing number into the red.’

The Bank of England interest rate began the year at 3.5% but has been hiked aggressively over the past six months, hitting 5.25% by the end of Q2.

On top of this, the government’s £18bn energy support package for businesses began to taper away at the end of the first quarter, meaning that energy costs for pub landlords started to rise.

With many also needing to repay Covid support loans and strike action leaving many pubs in city centre locations losing out on vital trade, some have been doing better than others.

In July, the largest pub chain Wetherspoons announced plans to close and sell 39 pubs, citing staffing issues and a slump in trade as factors that contributed to the decision.

Howard added: ‘Stubbornly high inflation for food and drinks is forcing many pubs to put prices up even when patrons have less money in their pockets. Rail strikes hit city centre pubs hard during the peak Christmas party period. Pubs with a more diversified offering geographically and in terms of services, such as food and accommodation, have usually fared better.

‘Publicans are still restricting opening hours and scaling back the services they provide to customers during off-peak hours. While it can provide a short-term boost to profitability to focus on the most profitable business hours, it can come at the cost of long-term customer relationships.’

But, while many large pub chains and small independent pubs continue to close in significant numbers, some are thriving.

Independent craft breweries are taking advantage of the ‘craft beer boom’ to open their own pubs in large numbers and there has been an increase in theme pubs, such as the Boom Battle Bar chain, which combines food and drink with games.

BrewDog recently opened London’s biggest pub at Waterloo station, as part of its plans to triple the size of its bars and hotels business to around 300 venues by 2030.

Howard added: ‘Even though many of the large pub chains and independent pubs are struggling, innovative new market entrants, such as pubs owned by craft breweries and theme pubs, are shaking up the industry.’

If you’re managing a redundancy process, be sure to head to BrAInbox today for answers to questions like What is subjective criteria and why should I not use it in a redundancy process?

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