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The future for the UK pub industry

Sign on the gate leading to the beer garden in a British pub

The pub industry has undergone considerable changes in the past 10 years. While we may be seeing plenty of bars open in the UK, the ‘traditional’ pub seems to have fallen out of favour. According to figures released by the British Beer & Pub Association (BBPA), the number of pubs operating in the UK has fallen by 17% since 2000. In numbers, that equates to a staggering 10,500 pubs closing, leaving around 50,000 currently in operation. In 2017 alone, CAMRA (Campaign for Real Ale) reported 985 closed their doors for the last time, with almost 19 shutting shop per week. However, it is fairly consistent with the previous year’s figures, which could suggest the hard times may have passed for the pub industry. Business Rescue Expert, leading UK insolvency experts, are sharing their thoughts on the sector’s changing landscape.

Food and Beverage Service Insolvencies

‘Food and Service Activities’ – how the insolvency service presents its data – incorporates restaurants and mobile food service activities, such as event catering and the like. The insolvency service further breaks down this data to cover ‘Beverage Serving Activities’, including pubs, gin houses and similar establishments. Below, we have compared the two types of data.

UK Food & Beverage Insolvency Service Statistics

The insolvencies charted in the UK in the F&B sector – including restaurants and beverage serving activities – are largely made up of voluntary liquidations. The numbers for compulsory liquidation are relatively small in comparison, with few administrations and CVAs in the industry also. In reality, this is consistent with the insolvency market in the UK, with CVLs accounting for 74.6 (12,681) insolvencies in total, in 2017. Across the year, 17,243 UK businesses entered insolvency in the UK.

The trajectory for total insolvencies in the UK – including voluntary – has steadily increased since 2010. The UK did experience some relief in 2014 and 2015, but the trend has continued growing since 2015.

UK Beverage Serving Insolvency Statistics

While the above paints a picture of insolvencies increasing, the numbers contradict the year on year insolvency statistics for Beverage Serving Activities. The figures remain remarkably steady and have done so for the previous four years. There had even been a slight decrease in the number of voluntary liquidations, between 2014-2016, levelling out again in 2017.

Does that mean good news for the beverage serving sector?

The beverage serving sector has seen a slight decrease in voluntary liquidations, between 2014 and 2017, so it’s heading in the right track. These figures reflect the overall decrease in the number of insolvencies across the board for the beverage serving sector. Unfortunately, the same cannot be said for the overall Food and Beverage sector, which has seen a rise in insolvencies up to 2017.

UK pub landscape in recent years

Over the years, the UK pub industry has faced tough changes to policies and increasing competition with ‘trendy’ bars.

Policy changes include:

  • Higher rates of beer duty (this was subject to a welcome freeze in Autumn 2017)
  • Slower rates of business rate review
  • The smoking ban in 2007 led to a significant change in the industry

When we dig even deeper into the reasons why pubs may be failing in the UK, we can attribute a lot of change to the credit crunch and global recession. During the initial launch of the smoking ban (in 2007) and up to 2010, the UK saw extremely high pub closure rates, totalling up to 6,000. To put it in perspective, an average of 850 pubs closed per year between 2011-2016 and 985 shut in 2017.

Impact of changes to insolvency rates post 2014

Market changes continue to influence the sector, and will continue to do so in the future, taking into account the figures. Increased competition from off-sales – particularly sales from supermarkets and off-licences – has had a massive impact. Consumers can actively drink at home and purchase cheaper drinks before heading out.

The dramatic increase in the number of breweries in the UK could also be counted as a factor to the changing marketplace. More than 300 breweries opened in 2016, with the number pushing way past 2,000 in 2017 and set to grow for 2018. According to reports, the ‘craft beer boom’ is responsible for the 64% increase, thus negatively affecting ‘traditional’ pubs. More and more consumers are turning towards craft beer and gin specialists, experiencing a massive boom in the industry. This estimation is also reinforced by people drinking less than ever before, and opting for specialists when choosing the indulge.

Pub industry in the future

Looking at the figures, appealing to younger generations may be the way forward for old-fashioned pubs. According to The Pub Market Report 2017, 14.8% of 18-24 year olds (from a survey of 2,000) listed social media as their top leisure activity. Therefore, a proactive social media strategy may be able to pull the traditional pub from the past and into the present – particularly as drinking in a pub was voted 16th. That same report also stated that atmosphere, friendliness, music and free WiFi played a part in their choice to drink.

Ultimately, the landscape for the pub industry has changed dramatically over the past 10 years, and will continue to do so. The pubs that adapt to the changes and aim to improved will be better placed to survive in the industry.

Elliot Preece