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Craft beer and food to thank for fall in pub company closures

By Michelle Perrett , 09-Dec-2016
Last updated on 12-Dec-2016 at 14:45 GMT2016-12-12T14:45:23Z

Drop in insolvencies: borrowing from non-bank sources have boosted businesses
Drop in insolvencies: borrowing from non-bank sources have boosted businesses

Focusing on current trends such as craft beer and better food have led to a significant fall in the number of pub and bar companies going insolvent, new research claims.

The number of pub and bar companies going insolvent dropped by 7% over the year ending 31 March 2016, according to figures from Ortus Secured Finance.

The specialist financial lender said that the numbers had decreased from 521 to 480 in just one year. The latest figures continue the trend seen during the past three years, which saw the numbers drop by 16% since 2013-14.

The company said the drop in insolvencies was partly due to pub companies being able to replace scarce bank funding with alternative finance or debt from non-bank lenders.

Struggled

Many had struggled to access capital because traditional lenders considered pubs a more risky investment during the recession.

However, these new funding streams have allowed small companies to transform their businesses by including new trends such as craft beer.

The company said that greater access to finance has meant that many can purchase beer from a wider range of suppliers on better terms; invest in furnishings, lighting, payment systems, and workstations; build 'interior designer' beer gardens or roof gardens and invest in new kitchen equipment or 'open kitchens'.

'Performing well'

Ortus Secured Finance managing director Jon Salisbury said: “With insolvencies steadily declining in the past few years, it’s clear that the pub sector is performing well.

“A key driver for this decline is the availability of finance for the sector – small and big pub companies alike are becoming increasingly aware of alternative finance and the value continued investment can have for their business.

“Finance plays a vital part in helping pub and bar companies take advantage of growing trends in public demand such as craft beer.”

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