Pub closures reach decade high amid rising interest rates

Two-hundred pubs entered insolvency in the first three months of 2023 – the highest quarterly figure recorded in a decade.

 

According to data from accountancy firm Price Bailey, 620 pubs closed across England, Wales, and Scotland over the past 12 months, a 68% increase on the previous year.

 

Rising interest rates have left many businesses unable to meet loan repayments, the firm said.

 

Research commissioned by Price Bailey found 22% of pubs had reduced trading hours due to staff shortages.

 

The survey of publicans, some of which operate multiple sites, found 61% were considering raising prices to cover energy costs, down from 75% at the end of last year.

 

Half of those surveyed were looking at raising prices to cover the increased cost of raw materials while 36% said menu items might get more expensive due to the rising cost of labour.

 

The study also revealed optimism among publicans is on the rise despite the surge in business failures.

 

Some 8% of publicans have hired staff over the past month compared to just 2% six months ago.

 

Over the next 12 months, 20% of pub owners are expecting business performance to improve while 16% think it will worsen. This is an improvement on December 2022, when 40% of publicans expected performance to worsen and only 16% thought it would improve.

 

Some 35% of publicans said turnover was rising, compared to just 7% six months ago.

 

Matt Howard, head of the insolvency and recovery team at Price Bailey, warned the improving economic outlook could come too late for businesses that had built up high debts since the pandemic.

 

He added: “There is often a lag between a return to more robust economic activity and declining insolvencies. Banks will likely start to put increasing pressure on debtors to perform or pay off loans.

 

“Focus will start to shift from financially stressed businesses to startups and those with better prospects, which may mean that insolvencies continue to rise despite many pubs seeing improved takings.”

 

Major pub chains including Stonegate, Admiral Taverns, Marston’s, and JD Wetherspoon have looked to offload sites over the past few months.

 

Whitbread is reportedly looking to sell more than half of its 440 pub-restaurants for around £600m.

 

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