The number of licensed premises in the UK declined by 2% in the 12 months to September 2019, with 15% of drink-led pubs having closed in the past five years, according to a new report.
However, the Market Growth Monitor by CGA and AlixPartners highlighted a move to new concept restaurants and food-led pubs as the bright spots in the market.
The latest quarterly survey of around 116,500 British pubs, bars, restaurants and other licensed premises reported a 2% fall in venues, the ninth successive quarter of year-on-year decline, although the rate of closures is the lowest since mid-2018.
Restaurant numbers fell by 2.4%, equivalent to a net closure rate of 12 outlets per week. The majority of these were independent businesses, while group restaurants marginally increased by 0.3%.
While many casual dining chains closed or fell into administration, CGA reported that some of the sites were repurposed by small and medium sized restaurant groups.
CGA business unit director Karl Chessell said: “There’s no doubt that some leading casual dining names have had a tough 2019, but one brand’s difficulty is another’s opportunity. With capacity having eased in recent months there is still a lot of opportunity for growth in casual dining—but only if the offer, execution and price are all spot on.”
According to AlixPartners’ managing director Graeme Smith, there are opportunities for growth. He said: “From a mergers and acquisitions perspective, there remains high interest in concepts with growth potential and which tap into consumer trends.”
This was demonstrated by Richard Caring securing a £200m investment from Hamad bin Jassim bin Jaber Al Thani for a 25% stake in Caprice Holdings, the operator of the Ivy, Annabel’s and Sexy Fish, and by Social Entertainment Ventures, the operator of various experimental leisure concepts that recently secured a $20m fund to aid expansion plans in the UK and internationally.
By contrast, the pub sector has proved more challenging. As well as the number of drink-led pubs plummeting by 15.9% over the past five years, the number of leased pubs has fallen by more than 5,000. At the same time, there has been the opening of 1,000 managed pubs and a 1.5% increase in food-led pubs, reflecting a shift by larger groups switching their emphasis to food.
Smith added: “While drink-led sites are declining and food-led outlets have grown to have a greater share of overall site numbers, there still holds a place in the market for wet-led operators who deliver a differentiated experience to customers. This is demonstrated by the success of high-quality operators, such as the likes of Arc Inspirations through its BOX and Manahatta concepts.”