The closure of 980 sites—an average of 16 a day—shows that the hospitality industry remains under severe pressure from the effects of COVID and a range of operational challenges including labour shortages, disruption to supply and rising costs.
The Market Recovery Monitor indicates that small businesses have borne the brunt of closures. Independently run pubs, restaurants, bars and other licensed premises accounted for nearly three quarters of all closures between July and September, reducing the indie sector in size by 1%. In contrast, the managed sector proved robust over the summer, achieving growth in site numbers of 0.1%.
The latest report also highlights the plight of nightclubs over the COVID crisis. Despite being able to trade from July, Britain’s number of nightclubs dipped by nearly 100 to just over 1,000 by September—a drop of 9.0% in just two months.
Elsewhere in the licensed sector, the report’s analysis of recent closures emphasises the largely indiscriminate nature of COVID’s impact on hospitality, with similar rates of failures from place to place and venue type to venue type. The closures between July and September mean there are now 9,900 fewer licensed premises than there were before the pandemic hit in March 2020, and the Market Recovery Monitor warns more business failures are possible before the end of 2021 if these significant trading challenges are not addressed.
Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA, said: “These numbers are a reminder—if it were needed—that the crisis in hospitality is far from over. Restrictions on socialising and trading may have eased, but their impacts continue to be felt by restaurants, pubs and bars whose reserves have been eaten up by months of closure. Factor in a crisis in recruitment, rising costs in many key areas and widespread supply issues, and it is clear that thousands of firms and jobs remain vulnerable. Targeted government support on these major challenges—starting with more VAT relief—is needed to help to prevent hospitality’s recovery from stalling.”
Graeme Smith, AlixPartners’ managing director, said: “These figures are a stark reminder, if needed, that the full lifting of restrictions in July did not signal an end to the challenges faced by hospitality businesses. The impact on nightclubs, which were unable to trade at all during the pandemic, has been particularly acute with almost one in 10 sites closing in the past two months. Demand remains strong but with staff shortages, utility cost inflation and supply-chain disruption, there are renewed efforts to secure continued government support to the industry to help it weather this storm as the reopening and rehabilitation process continues through what may be a challenging winter.”
The full October 2021 edition of the Market Recovery Monitor from CGA and AlixPartners is available now – download the report.