Pub insolvency numbers soaring
Some 530 companies running licensed venues closed last year, representing a 13% jump in the number of companies going bust in comparison to the previous year.
This was for the 12-month period ending 30 September 2019.
National accountancy group UHY Hacker Young said the upward trend in insolvencies had been driven by soaring costs and a gradual weakening of consumer confidence.
The firm stipulated the weakness in Sterling since the 2016 Brexit referendum had driven up costs of imported drinks and pubs had struggled to pass those increases on to customers.
Many licensed sites have found it difficult to adapt to the morphing lifestyle preferences of drinkers, with many younger consumers opting to drink less alcohol, the report said.
Peter Kubik, partner at the accountancy firm, said pubs which boosted their dry offer had done well to counteract changing drinking behaviours.
He said: “It is hard to see any short-term changes to the pressures on the pub sector.”
Not hopeless
“That is not to say that the pub sector is in a hopeless situation. A lot of pub groups have improved profitability by adding more food sales and non-alcohol sales in order to increase footfall in slower periods of the week.”
Kubik said investment was needed for many sites to adapt to the changing landscape of consumer trends.
He added: "Upgrading premises to maintain appeal with younger drinkers can also help cope with weaker sales among that group.
“However, developing a food offering or refurbishing requires capital. Smaller pub groups are finding it hard to get bank finance at the moment or non-bank finance at competitive rates.”
“Hopefully, once the Brexit question is cleared up, high street lenders will be less nervous about lending to smaller pub companies.”
Chartered accountancy firm Gerald Edelman declared the food-led sector would stabilise the overall performance of the pub industry in the coming years.
It predicted that pubs which focus on food would drive growth in the sector past the £19bn mark in the coming twelve months.
