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Financial strength of the pub sector fell last year

Start a new threadBy John Harrington, 31-Jan-2012

The financial strength of the pub, restaurant and wider leisure sector fell last year after an increase in the proportion of businesses failing, according to the latest insolvency index from Experian.

Overall there were 1,586 insolvencies in the lesiure & hotels sector, which includes pubs and restaurants, up 10.5% on the previous year.
The proportion of businesses failing in the sector increased from 1.69% to 1.82%. The sector’s “financial strength” score, which predicts the likelihood of business failure in the next 12 months, with 100 being the least likely to fail, was 77.03 (2010: 79.18).
Meanwhile, there were seven insolvencies in the brewery sector, which also saw its financial strength decline from 79.64 to 75.68.
Overall 1.1% of businesses failed in 2011, a marginal increase on 2010 (1.03%).
Max Firth, UK managing director for Experian’s business information services division, said: “Given the challenging economic climate in 2011, businesses in the UK were pretty resilient and this was reflected by the stable insolvency rate during the year.
“For businesses to improve their financial health and avoid insolvency, it is vital that they understand the risks they are exposed to and have strategies in place to protect themselves. By monitoring the performance of all current and potential clients, they can fully understand and prepare for the impact they could have on them if they failed.”

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