UK pub closures in 2022 near to highest level in a decade

Pub and bar bankruptcies across the UK were near the highest level in a decade with more than 500 businesses folding last year, according to an analysis of official figures, as hospitality venues struggled with rising costs and tepid demand.

Some 512 companies went out of business in 2022, up 56 per cent from the previous year when pandemic-related business support stopped a wave of insolvencies, according to an analysis of Insolvency Service data by accountancy firm UHY Hacker Young.

The number of closures was close to the peak of 551 recorded in 2013. The total number of licensed venues in the UK has fallen by 15 per cent over the past decade with the annual bankruptcy rate averaging 466.

Kate Nicholls, chief executive of UKHospitality, an industry body, warned the damage to the hospitality industry would look “much starker” after the government’s £18bn energy support package for business “tapers away” from the end of March.

The sector has been struggling with a combination of high energy, labour and food and drink wholesale costs, which has been partially offset by the state intervention to cap the cost of gas and electricity.

The government will extend the scheme for another year from April but is slashing the level of support it gives to businesses and put the total cost of the revised package at £5.5bn. Companies facing particularly high bills will receive a unit discount of £6.97 per MWh for gas and £19.61 per MWh for electricity under the replacement scheme.

“This scale of insolvencies is unfortunately reflective of the enormous challenges facing hospitality,” added Nicholls, pointing to the impact of widespread strike action on demand and the pressure of repaying pandemic loans on top of the effect of high inflation.

J D Wetherspoon said last month that like-for-like sales in the 12 weeks to January 22 were still 2 per cent down on pre-pandemic sales in the same period in 2019. The pub chain increased prices by 7.5 per cent this year to offset cost rises.

“Energy costs are simply a pub killer,” said Steven Alton, chief executive of the British Institute of Innkeeping, which represents independent pubs. He estimated that up to half of venues were suffering because they were locked into fixed-term energy contracts as prices peaked last autumn in “a grossly unfair and uncompetitive [energy] market”.

He called on the government to help those businesses. “As energy costs have now significantly reduced, we are calling on government to allow these unfair agreements to be changed to access today’s competitive rates.”

Wholesale gas prices have fallen nearly fivefold since their late August peak and wholesale electricity prices are down fourfold from their late September peak.

Emma McClarkin, chief executive of the British Beer and Pub Association, called on the relevant parliamentary committees “to launch an investigation into malpractice and profiteering on the part of energy suppliers”.