Pub insolvencies up amid cost-of-living and rising sobriety
Pub and bar company insolvencies increased by nearly a third in the last year as the cost-of-living crisis continued to impact sales. The sector has also reportedly been impacted by higher levels of abstention among younger people.
According to data from UHY Hacker Young, pub and bar insolvencies increased by 30 per cent in the year to April 30 2024, rising to 784 compared to 602 a year earlier. UHY attributed these figures to high drink prices and an increasing number of people limiting their spending during the cost-of-living crisis.
UHY Hacker Young partner Peter Kubik said: “With money tight for many households, current alcohol prices mean more people are choosing to drink at home instead of going out. The pub and bar industry has struggled for a long time but the past two years have been particularly difficult.”
The company also highlighted the shift away from drinking throughout the UK. This trend is particularly pronounced among younger age groups, with 26 per cent of people aged between 16 and 24 now saying they are completely tee total.
Kubik commented: “The young in particular are drifting away from drinking after work or at the weekends, impacting pubs and bars. The demographic trends for pubs and bars in the long term are very concerning.” Kubik added that the new Labour government must “overhaul the current rate system in order to help the high street.”
As with other industries that have seen high insolvency levels, such as retail, however, there have been signs of improvement. The UK economy has stabilised over recent months and there is hope that the Bank of England may cut interest rates this year, potentially improving consumer confidence.
The hospitality sector has also been boosted over recent weeks by improving weather and England’s progression in Euro 2024. According to CGA by NIQ’s Daily Drinks Tracker, warm weather and England’s group games at Euro 2024 contributed to an uptick in drink sales during the last week of June.
With England continuing to progress to the final of the Euros, this boost is likely to grow further over the weekend ahead of Sunday’s final and could surge more if they win the competition. Should England ultimately be crowned champions, trade body UKHospitality has estimated that pubs and bars across the UK could experience an £800 million boost.
However, while acknowledging that the Euros could provide “a strong summer of trading” for UK bars and pubs, Peter Kubik warned that this is “only likely to be transitory”.
Despite high levels of administrations over the past year, May 2024 showed a 21 per cent year-on-year drop in UK company insolvencies
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