The Business Distress Index – A Worrying Picture for British Pubs
By Chris Bristow, Real Business Rescue (www.realbusinessrescue.co.uk)
The Business Distress Index published by Real Business Rescue, paints a worrying picture of the financial health of British pubs and restaurants as critical financial distress levels increased by a quarter in Q1 2025, compared to Q1 2024.
With numerous trading challenges compounding the already strained sector, British pubs must brace themselves for further trading uncertainty as economic conditions worsen.
What’s the financial state of British pubs?
The Business Distress Index which provides a sector breakdown shows a dismal view of financial health as the number of bars, pubs and restaurants in critical financial distress jumped from 1,479 in Q1 2024, to 1,941 in Q1 2025. The 31% increase equates to 460 more businesses falling into a critical state which is associated with deteriorating net worth, retained profits, and working capital. Pubs in this position are often at high risk of creditor pressure and enforcement action, such as a winding up petition.
According to the British Beer and Pub Association (BBPA), pub insolvencies stood at around six per week in 2024, resulting in around 4,500 job losses. The population of British pubs fell from 47,613 at the start of 2019, to 45,345 at the start of 2024. This is a substantial reduction, albeit unsurprising given the seismic economic impact of the coronavirus pandemic in 2020, the inflation crisis in 2022, and the ongoing cost of living crisis.
Light at the end of the tunnel – what’s in store for British pubs?
With more British pubs entering financial distress, what respite is available to help them manage their financial health? The reduction to business rates relief came as a blow to British pubs, bolting thousands of pounds to their tax bill. Colliers estimates that pubs will see bills rise by 140% over the near year on the back of the reduction to business rates relief.
Other factors fuelling rising costs include recent changes to Employers’ National Insurance Contributions and National Living Wage. High inflation also creates a pressured trading environment for pubs as the cost of doing business skyrockets, beer prices inflate, utility bills rise, and consumers restrain spending.
Business rates reform – The much-awaited business rates reform promised by the Labour government will see the introduction of lower multipliers to provide permanent support to British retailers and pubs. The 2025 Autumn Budget will shed light on the intricacies of the changes, including multiplier rates and any additional relief.
Formal rescue options – There are a range of formal insolvency options available for British pubs that can facilitate company rescue, such as a Company Voluntary Arrangement or Company Administration. Due to the high stock nature of pubs and their reliance on numerous suppliers, creditor pressure is a common pain point, and often one of the first signs of insolvency.
The earlier professional insolvency advice is sought, the earlier a rescue plan can be initiated and the reputation of a business protected. Strategic restructuring of company operations or company debt can also strengthen the viability of pub enterprises, particularly during this period of economic uncertainty. As pubs wait for economic conditions to improve, they must be on their best financial footing to remain operational in the meantime.