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Morning Briefing for pub, restaurant and food wervice operators

Mon 1st May 2023 - Hospitality loses 4,600 venues in a year, ten nightclubs shutting each month, Star Pubs & Bars to invest £40m
Hospitality loses 4,600 venues in 12 months but closures slow in early 2023: Britain has suffered a net decline of 4,593 licensed premises in the year to March 2023, but the resilience of managed groups means the rate of closures has slowed in the last quarter, the new Hospitality Market Monitor from CGA by NIQ and AlixPartners shows. The drop is equivalent to 4.3% of the licensed sector since March 2022, and an average of 12.6 closures a day. However, net closures slowed to 756 venues in the first three months of this year, a quarter-on-quarter drop of 0.7%, and equivalent to 8.4 closures a day. Independent businesses have borne the brunt of closures, with a 5.9% drop in numbers over the last 12 months, while managed groups achieved growth of 1.5% in the same period, including 0.3% in the first three months of 2023. In the three years since the start of the pandemic, the independent sector has shrunk by 14.1%, more than four times the contraction of 3.3% in the managed sector. The report also highlights key trends including a much steeper drop in restaurants (down 7.8% since March 2022) than food pubs (down 2.2%) and high street pubs (down 2.5%); a 30.6% contraction in the nightclub sector since March 2020; and a slowdown of sports and social club closures, with numbers down 4.8% year-on-year but just 0.3% quarter-on-quarter. Karl Chessell, CGA by NIQ’s director hospitality operators and food, EMEA, said: “Each of the 4,593 closures over the last 12 months represents a sad loss of jobs and the permanent withdrawal of a community asset. It is at least encouraging that losses have slowed in the first few months, a welcome indicator that demand for hospitality remains strong. However, the recent cut in government support on energy bills, alongside a hike in minimum wage rates and the ongoing tax burden, now leaves thousands more fragile venues at risk of closure. Hospitality has shown how, with the right backing, it can generate jobs and fire the economy, but sustained help is needed to tide the sector through the current crisis.” Graeme Smith, AlixPartners’ managing director, added: “While the number of pubs, restaurants and other licensed venues continues to contract in UK hospitality, there is some positivity in this latest analysis of the market, given that the overall cadence, or rate of decline, has slowed significantly. Underpinning this is the fact that the rate of closures in all major cities is reducing, as covid-19 concerns subside and workers and tourists steadily return to urban centres, even, to a degree, on Mondays. This stabilising picture extends to London, the largest leisure market, which was most affected by covid, and it’s clear that many of Britain’s city centres are returning to something comparable with their pre-covid vibrancy. Tellingly, this latest study underlines the growing divide between larger and smaller operators, reflecting the varied ability to withstand the continued headwinds the sector faces. The closure rate of independent businesses – the lifeblood and entrepreneurial driving force of the sector – continues to vastly outstrip the better-funded corporates and the branded operators. It highlights the need for government support to be extended, especially on energy costs, if small (often family-owned) businesses are to survive. On a 12-month view, the number of closures is still very significant. A statistic homing into view is that by the end of the year, the total number of licensed venues is likely to fall below 100,000 for the first time in many decades. It reflects approximately 13,000 closures since March 2020, and the many thousands of pubs that have shut in the decades prior. This is a trend that speaks to the relative shift from high-frequency drinking occasions, which have in part made way for the growth in (less frequent, higher spend) dining-led visits, and the rise, in recent times, of (less frequent, higher spend) competitive socialising occasions.”

NTIA says UK clubs face crisis with ten businesses closing every month as industry prepares to say goodbye to The Printworks: The Night Time Industries Association (NTIA) has said the night-time economy has already suffered irreparable damage, and, similar to the wider hospitality sector, will face further losses over the coming months, if “we do not see immediate and decisive support from the government for the remaining businesses”. It comes in the week that the industry will say goodbye to The Printworks in London, after British Land unveiled plans to convert the nightclub into a “flexible workspace with a rich cultural offering”. Michael Kill, chief executive of the NTIA, said: "Printworks has been described as ‘the theatre of dreams’, a ‘cornerstone of culture for the capital’, and as this iconic space closes it will leave a huge void in London's music venue scene. Playing host to some of the biggest names in the music industry and for many fans this venue will be hard to let go. It has shaped communities, nurtured talent and has an emotional connection with millions of music lovers from around the world. As we say goodnight to this iconic space, we recognise that clubs and venues across the country are in crisis, with recent figures showing 32% of clubs closing since 2019, and only 865 nightclubs remaining in the UK, with ten nightclubs closing permanently every month. With the impacts of Brexit, energy and cost inflation biting, we need the government to address the immediate issues faced by some of the hardest hit business sectors. The night-time economy has already suffered irreparable damage, and similar to the wider hospitality sector will face further losses over the coming months, if we do not see immediate and decisive support from the government for the remaining businesses. The long-term strategy for recovery has seen our industry suffer a huge amount of collateral damage, with independent businesses and culture being hardest hit. It will require swift and direct action in terms of a sector wide VAT reduction, strict management of energy supply and relief by Ofgem, a re-evaluation of business rates relief particularly for late-night businesses and a lowering of visa thresholds for international workers."

Star Pubs & Bars ‘open to further acquisitions’, investing £40m in 570 mainly neighbourhood pubs: Heineken-owned Star Pubs & Bars has said it is open to further acquisitions, as it gears up to spend £40m refurbishing 570 of its pubs this year. The company currently has an estate of circa 2,400 managed and leased pubs across the UK. “We are open-minded to future acquisitions, we have the financial firepower to do so,” Chris Moore, Star’s property director, told Propel. It comes as Star prepares to invest £40m into mainly its neighbourhood pubs, as the trend for drinking local looks set to stay. The company said research shows almost 60% of pub-goers are choosing to drink in pubs closer to home during the cost-of-living crisis, while 52% said they are supporting their local pub more. Of the 570 Star pubs in line for revamps in 2023, 100 will be major upgrades costing an average of £200,000 each. Neighbourhood pubs, where most of the investment will be focused, make up 70% of Star’s estate. Moore said: “We are a community neighbourhood pub business located where people live, and post-pandemic, people are seeking better experiences closer to their doorstep. We started to see the trend before the pandemic before it accelerated, and although we’re seeing a return to normality in some respects, this is a trend we can see staying for the long term. People want a local pub they can be proud of.” Moore said the investments are taking place across the UK, except in Scotland. “There’s a bit of uncertainty there due to the tied pub bill in Scotland, but we’re investing in our managed operator estate there, and there are longer term opportunities there,” he added. “Our manager operated business is doing very well. Almost a quarter of our investment is in this area with the overwhelming majority directed at our leased and tenanted pubs, our core estate. Each refurbishment will be bespoke and tailored to the individual pub and the community it serves, and garden makeovers will be a common feature, including new outdoor seating areas. They will also include measures to boost sustainability and reduce energy bills, such as installing technology that will turn off drinks fridges when no movement is detected behind the bar, and switch off cellar cooling equipment when the surrounding temperature is low enough. Lawson Mountstevens, Star Pubs & Bars’ managing director, added: “We know from previous economic downturns that when customers’ disposable income is squeezed, they look for an exceptional experience when they go out. It’s more important than ever to invest during uncertain times like these, to keep pubs thriving and meeting the needs of their communities. Our investment is a vote of confidence in the great British local.”

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