Warning of ‘worse to come’ after 9,900 pubs and restaurants are lost in 2020
There were 9,930 closures during the year, slightly offset by 3,955 openings – though sector figures reckon “much worse” is still to come
Coronavirus lockdowns led to nearly 6,000 pubs, bars and restaurants being lost in 2020 and the industry thinks things could “get much worse before they get better”.
Amid continuing grim data on coronavirus cases and deaths, there is a growing acceptance that the current lockdowns in the UK will be in place in some form until Easter, and according to some reports, possibly even into the summer.
There was a net decline of 5,975 hospitality sites in the year, a fall of 5.1% in terms of all licensed sites, according to industry data from CGA and AlixPartners, with the number of net closures being more than triple the previous year.
There were 3,955 drinking holes and other licenced premises opened during the 12-month period but this was massively counteracted by 9,930 closures.
With these premises lying empty, some cash-rich industry figures are poised to swoop in and snap up cut-price assets, including PLC () and the former boss of .
Help needed
“Our sector is far from out the woods yet though and it continues to fight for its very survival through the pandemic in 2021,” warned British Beer and Pubs Association chief executive Emma McClarkin.
“We fear things could actually get much worse before they get better for our pubs and brewers.”
With one in five sector pub and restaurant businesses saying they do not have enough cash to last beyond February, Kate Nicholls, boss of the UK Hospitality body, agreed, saying the loss of 6,000 premises “is going to be the tip of the iceberg if we continue on our current course”.
More support for the industry is needed from the government, the BBPA said, with the data providing further evidence showing how the COVID crisis and lockdown is “ripping pubs away from their communities for good, it is more important than ever that the government backs our local pubs and brewers”.
The trade body called for grants delivered to pubs “immediately before it’s too late” and when the time comes to allow premises to reopen “properly” and provide a stimulus package “that helps pubs to thrive including extensions to the Business Rates holiday and VAT cut, as well as a beer duty cut”.
Restaurants have arguably been hit hardest of all, Nicholls said, with many of the worst off being independent businesses “teetering on the verge of collapse due, in large part, to the issue of rent debt”.
“This is a stark reminder of the importance of having an exit strategy and ongoing support for businesses,” UK Hospitality said.
“Sustaining businesses, keeping them alive and keeping jobs protected is vitally important and is going to be key to recovery once we emerge from this.”
READ: End of lockdown feels further away but some consumer stocks expected to thrive
Mark Lynch, partner at corporate finance house Oghma Partners, predicted that thousands more pubs and restaurants will close throughout 2021.
“Lockdown restrictions have essentially frozen Food to Go and food service providers that are unable to service clients as per normal. Pubs, restaurants and food service manufacturers and, to a lesser extent, Food to Go capacity are disappearing from the market.”
However, he noted that this was leading to positive sales growth for direct to consumer and supermarket companies, as recent results have shown.
“We have already seen a significant shift in consumer behaviour which has boosted growth for those companies in 2020 and could be set to increase as they acquire more market share.”
In terms of M&A, between September and December last year there were 28 transactions recorded by Oghma, with a total estimated deal value for the period of over £1bn though overall deal volume and value for 2020 was the lowest recorded since the firm started recording data in 2009
“Despite all the market uncertainties…
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