Number of premium and all-day bars increases by 4.1%

By Stuart Stone

- Last updated on GMT

Sector trend: the number of premium-leaning all-day bars has grown by 4.1% in the past 12 months according to AlixPartners and CGA
Sector trend: the number of premium-leaning all-day bars has grown by 4.1% in the past 12 months according to AlixPartners and CGA
CGA Insight and AlixPartners’ latest quarterly Market Growth Monitor has revealed the number of premium bars and licensed cafés has increased by 4.1% in the year to March 2019.

The report explains that pubs and bars that have a “premium-leaning” offer and “flex” their operation to suit different times of day have been particularly successful in the past 12 months.

CGA and AlixPartners’ report cited the rollout of managed groups such as The Alchemist​, The New World Trading Company and Arc Inspirations – the operator behind Manahatta, Banyan Bar & Kitchen​ and The Box​ – as well as the arrival of ambitious smaller brands such as London Cocktail Club, as key drivers of this premium, all-day movement.

Wet-led pub closures slow

While the Market Growth Monitor reported the rate of pub closures stood at an average of 28 per week three years ago, the number of venues closing per week has almost halved to an average of 15 per week according to latest figures.

This slowdown is even more marked in wet-led venues, which have seen their rate of closure slow from 31 per week three years ago to 13 per week in the year to March 2019.

According to the latest report’s figures, there are currently 49,496 bars in the UK – 17,817 of which are food-led and 31,679 are drink-led – though there have been 224 net new openings of food-led pubs and bars in the five years to March 2019.

AlixPartners and CGA’s latest report also revealed the total number of licensed premises in the UK stood at 117,909 – a 2.3% decline during the year to March 2019 including a 2.4% decrease in the number of licensed venues on high streets during the same period.

However, a 10.1% increase in licensed premises in London in the five years to March 2019 suggests that the capital is bucking the trend of closures in built-up areas.

“The slowdown in closures of pubs and bars is a welcome trend because it reflects the growth in quality operators in the premium bars sector,” Graeme Smith, AlixPartners’ managing director explained.

“Keys to success have been an experiential offer paired with a distinctive drinks proposition, and many have also developed a high-quality food offer that is taking share from traditional casual dining operators.

“The success of Loungers’ recent float​ is testament to this, and we expect to see renewed private equity interest in the premium bar sector over the next 12 months.”

Restaurant shakeout

The latest Market Growth Monitor figures also revealed that Britain had 768 fewer restaurants in March 2019 than it did 12 months ago – with the number of restaurants declining for the fifth successive quarter and the pace of closure increasing from two per week to 15 per week, during the same period.

Discussing these findings, Smith explained: “This edition sees an acceleration of the group restaurants closures trend, albeit coming after a period of sustained growth in the past five years.

“As this shakeout continues, many believe a period of intense consolidation is overdue, especially following the spate of casual-dining restructures and ongoing cost pressures that have left investors looking at ways to exit struggling businesses.

“However, the question remains whether anyone really has the appetite or courage to bring together some of the more established groups that are currently looking inward and focused on returning to an even keel through reinvigorating their estates.

“We note that as larger managed groups are consolidating their estates, smaller brands – particularly those with private equity or bank funding available to them – are seizing the opportunity to grow their site portfolios and take market share from their less agile counterparts.”

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