Severe failure rate for pubs

Pubs, bars and restaurants are three times more likely to go bust than any other business, a new survey has revealed.

A study of 150,000 business failures, undertaken by accountants UHY Hacker Young, revealed that 15.5% of businesses in the UK hospitality and catering sector fail every year, compared to just 5.25% for the economy as a whole.

According to UHY Hacker Young, difficulty in raising second-round financing, poor market research and financial planning and the challenge of building a loyal client base are all to blame for a high business-failure rate.

Partner Peter Kubick said inflation-busting rises in the national minimum wage and long-term increases in alcohol duty added to pressure.

"Not all licensees succeed in passing on the whole cost to customers," he said.

"Bars and pubs have the same vanity dimension as restaurants. Often inexperienced entrepreneurs decide to try their hand at running a bar, but when they find out there's a lot of hard work and very little glamour involved, their enthusiasm wanes."

Kubick added that he expected the failure rate to increase due to the added financial pressure the smoking ban will bring post-1 July.