Pubs and inns lead decline in licence premises in 2018

The Market Growth Monitor has revealed a steady stream of pub, bar and restaurant closures over the last couple of years— and the pace is increasing. In the 12 months to March 2018, the number of licensed premises fell by 1.3%, and in the year to June it dropped 2.5%. Now, in the 12 months to September, the rate has moved up again, to 3.2%.

This represents net closures of 3,878 licensed premises in a year—more than ten a day.

The data released today shows a reversal in the number of restaurants in 2018. A net fall of 539 restaurants in the year to September is reported in the new edition of the Market Growth Monitor from CGA and AlixPartners, equivalent to more than 10 closures a week, equivalent to 2% across the UK.

At the end of September 2018 there were well over 6,000 fewer pubs and bars than there were five years ago.

Food-led sites have been in growth over this five-year period, but the number of drink-led sites has fallen by 17.3% in the five years to September 2018. According to the reports authors however, with more pubs successfully turning to craft beer and premium spirits and talk of ‘peak food’ increasing, there are signs that the tide is turning for drink-led pubs. But they predict the trend of closures won’t end soon.

Drink-led community pubs saw the sharpest fall in numbers during the period (see table).

Pubs and bars have closed at a faster pace than restaurants, with numbers tumbling 11.3% in the last five years—equivalent to around 24 closures a week. But CGA research also reveals evidence that pubs and bars with a strong drinks offer are now performing better than for some time, following a summer boosted by warm weather and the football World Cup.

The quarterly Market Growth Monitor from CGA and AlixPartners provides expert in-depth analysis of trends in restaurant, pub, and bar openings and closures. Its data is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Britain. Other findings from the report include:

  • The pace of closures over the year has been higher in rural areas of Britain (3.6%) than on high streets (2.6%)
  • Some city centres continue to grow their numbers of restaurants, pubs and bars—including Birmingham, which added 25 in the year to September.
  • The north of England has seen a 2.8% fall in licensed premises in the last year—significantly lower than the decline of 4.0% in the south

CGA vice president Peter Martin said: “The eating out sector has been one of the UK economy’s biggest success stories of the last decade, with casual dining brands growing at a phenomenal rate. But as our latest Market Growth Monitor shows, there are clearly limits to the country’s capacity. We have seen a steady flow of pub and bar closures for many years now, but the restaurant sector is now going through its own clear out.”

He added: “The bulk of closures are from independents, while managed groups remain in growth—and this trend is welcome news for some of them, since it eases over-capacity and frees up more property. But these figures are a reminder that all restaurant brands need a well defined and brilliantly executed offer if they are to succeed in a survival of the fittest in 2019.”

AlixPartners managing director Graeme Smith said: “The figures in this edition of the Market Growth Monitor again illustrate that space remains for ambitious and innovative businesses to expand in areas outside of London. Pockets of growth are still to be found for businesses with a highly differentiated offer and strong focus on the guest experience.”

He added: “As ever, for operators to succeed, they need to show a deep understanding of their local communities and what will work for their customer base. Those who fail to meet these expectations will inevitably fall by the wayside. But for businesses in the sector looking to grow, there remain a multitude of options across both equity and debt and investors continue to see attractive opportunities.”