Pub and bar insolvencies rise 9% in past year

By Georgina Townshend contact

- Last updated on GMT

Tough times: pub and bar insolvencies have risen for the first time in four years
Tough times: pub and bar insolvencies have risen for the first time in four years

Related tags: Finance

Smaller pubs should consider their funding options to "tap into popular trends and retain market share", according to London-based commercial lender Ortus Secured Finance, as it warns pub and bar insolvencies have increased by 9% in the past year.

Figures​ released by the Government last month show there has been a 9% increase in the number of insolvencies of pub and bar businesses in the past year – to 482 in 2016-17 up from 444 in 2015-16.

This is the first time in four years that the number of pub and bar insolvencies has risen, according to the company.

Ortus Secured Finance explained that a fall in consumer spending – which slowed to just 0.1% in Q2 of 2017 – is "likely to be a major driver behind insolvencies", and warned the figure "may fall further still", following the recent interest rate rise.

Tough times ahead

In September, Moody’s Investors Service released a report, warning debt-laden pubs will suffer over the next 12 to 18 months and, at the end of August, global banking giant HSBC warned increased costs faced by the pub sector​​ put the trade at risk of “serious damage” if another financial crisis were to occur.

Jon Salisbury, managing director Ortus Secured Finance, said: “The uptick in insolvencies show there are tough times ahead for pub and bar companies​.

“Access to funds is vital if smaller pub companies are going to survive in the current climate. Capital investment can help smaller, more traditional country pubs stay afloat. Critically, it can also help win back customers lost to newer, in-touch, purpose-built bars and restaurants.” 

The company claimed that with better access to finance, larger pub and bar companies have been able to face these challenges with "greater ease" than their smaller competitors. Capital investments, funded by debt, can help venues continue to draw in customers and remain profitable.

Ortus Secured Finance advised smaller pubs to "consider the funding options available to them so they can tap into popular trends and retain market share".

These might include investing in new interiors, offering a wider selection of craft beers and artisan spirits and upgrading kitchen facilities.

Related topics: Other operators

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