Pub Closures Increase By 68% in 2022

UK Pub closures have accelerated to the highest rate in over a decade, with 620 venues closing in the year to March 2023 in another blow to an industry that has already suffered massively.

This marks a 68% increase in the rate of pub closures since 2022. Although there have been many insolvencies in this sector over the past 20 years, the rate has accelerated since the beginning of the Covid-19 pandemic. In 2022, hospitality made up just over 12% of company insolvencies, with pubs and restaurants making up over 90% of this.  

The hospitality sector is consistently one of the most vulnerable, having to contend with a variety of factors that make trading difficult. Historically, these have included high overheads, high levels of staff turnover and tightly controlled supply chains that make life difficult for smaller businesses. In recent years, the lasting effects of Covid, rising prices and decreasing footfall have created a ‘perfect storm’.

In addition to this, hospitality businesses typically have low profit margins and rely on being at 100% capacity to make a profit. Many smaller family businesses may also suffer from financial mismanagement as many are family businesses where owners have little to no formal training in business management.

This follows a very similar trend across several vulnerable sectors, with the ‘usual suspects’ such as retail and construction facing similar issues.

The Good News?

Despite the doom and gloom across a lot of businesses in the past, there is a slightly more positive outlook for pubs. 35% of UK pubs are now reporting that their turnover is rising. This is compared to 6 months ago when 58% said that income was decreasing.

So, whilst it may be looking up for some pub owners, this modest increase in business may be too late for those that have accumulated debt over the past few years. More businesses in this sector are likely to face insolvency as they struggle to meet their financial responsibilities.

This means not only insolvency for limited companies but also financial woes for pub owners. Directors of hospitality businesses are almost always required to sign personal guarantees, either with suppliers, landlords or for borrowing. In addition to this, increased HMRC recovery action is leading to more and more directors facing personal consequences over business arrears.

If you own a pub or, are worried about your business, it is never too late. Feel free to contact us on 0333 305 4331 or request a call back below to speak to a business debt specialist.