Pub closures reached their highest level on record in the second quarter of 2023, surpassing the previous record in the first three months of the year, research from Price Bailey revealed.
Following the closures of 200 pubs in the first three months of the year, almost 225 sites shut in the second quarter, amounting to a total of 729 businesses in the last year, around an 80% increase from 2021/22.
The alarming closure rates have coincided with a host of adverse factors squeezing the hospitality sector, including high energy, labour and wholesale food and drink costs.
At the same time, the disposal income of pub-goers continues to fall amidst the cost-of-living crisis.
Rising energy bills, inflation currently showing no signs of falling, rising wages and diminishing footfall as the public “tighten their belts” are the biggest issues for the sector since the year started, however changes to licensing and alcohol duty tax as well as a lack of support from the government have all hindered chances of a recovery, especially for independents.
“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,” said Matt Howard, head of insolvency and recovery at Price Bailey.
Other factors include the need to repay Covid support loans and strike action leaving many pubs in city centre locations losing out on vital trade over the festive season.
Matt Howard added: “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.”
“There are a large number of zombie businesses in the pub sector, which have been barely surviving, sustained only by low-interest rates. As rates have risen banks have started to pressure them to make capital as well as interest repayments on loans. This has proved the final nail in the coffin for many pubs. Business failures in the pub trade are likely to continue to rise throughout the second half of the year.”
