Number of UK licensed premises remains resilient despite ‘very tough year’

22/12/2017 - 09:49
The number of licensed eating and drinking out premises in the UK remains almost the same as in 2016 despite a number of cost pressures and Brexit related worries surrounding the industry.

As of September 2017, there are a reported 122,783 licensed premises in operation, a “very small drop” on numbers three months ago and “virtually identical” to those 12 months ago, according to CGA Peach, which carried out the research in its Market Growth Monitor in partnership with AlixPartners.

The tracker confirmed two long-term trends in the licensed trade: a steady decline in Britain’s pubs and a steady increase in its restaurants, especially from casual dining groups.

The tally of drink-led pubs has fallen by 2.3% over the last 12 months while restaurants have increased in number by 1.6% over the same period, fuelled by start-up and medium-sized casual dining operators.

Restaurant numbers in ‘Inner London’ are particularly impressive with a 3.1% rise, although 0.3% growth in ‘Outer London’ brings down the overall rate.

New openings in the capital have been driven by small and medium-sized managed restaurant groups, which have respectively increased their number of sites by 75% and 94% in just five years. Large groups operate 53% of all managed restaurants in outer London—but just 30% in inner London.

The sector has been stricken by increases in food, property, people costs and uncertainty over the consequences of the UK’s decision to leave the European Union, especially around the crucial issue of migrant labour, over the last year, according to CGA vice president Peter Martin.

CGA’s recent survey found that almost two thirds of hospitality leaders were not optimistic about the future of the market with almost half not optimistic about their own business.

Martin said: “There is no escaping the fact that 2017 has been a very tough year for many pub and restaurant operators, with steep rises in food costs and Brexit just two of the big challenges. 

“But these Market Growth Monitor figures are proof of the steely resilience of the sector and consumers’ continued appetite for eating and drinking out. Conditions aren’t about to get any easier next year, but there are reasons for cautious optimism as we draw towards the end of 2017.”

AlixPartners managing director, Graeme Smith, added: “At a site expansion level, the prevalent macro trends continue: a contracting pub market and the measured growth of food-led outlets. 

“Although the market’s long-term fundamentals—including consumer demand—remain robust, the sector’s immediate trading performance is what positive operators are politely calling ‘soft’. Many parts of the market are currently under pressure, and like-for-like sales growth has slowed in a competitive environment. 

“When combined with the backdrop of sustained cost inflation, profit growth is becoming harder to come by.”

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