There were optimistic signs on the high street as the closure of UK pubs, restaurants and bars slowed to their lowest year-on-year rate in two years, a new report has said – with managed restaurants showed to be in growth.
The Market Growth Monitor from CGA and AlixPartners, which monitors news opening and closures in the out-of-home sectors, said closure in the sector had fallen by 1.8% in the 12 months to December, the slowest pace of since March 2018.
However there had still be the equivalent of around six sites closing a day in the last 12 months, with the total number of licensed premises standing at 116,203 licensed premises in December 2019.
The number of pubs and bars fell 2%, with drinks led establishments worse hit while food-led sites fared better, with only 4,297 closures since December 2014.
And while the number of restaurants fell 1.6% overall, the data found the number of group restaurants had risen, up 1.8% in the 12 months to December, on the back of small to medium groups opening across the UK, with Birmingham, Bristol, Edinburgh, Glasgow, Liverpool and Manchester all seeing net growth year-on-year.
Manchester and Liverpool have collectively increased the number of licensed premises by around 20% in the last five years, it said, pointing out the importance of locally and regionally focused businesses such as New World Trading Company, Arc Inspirations, Mission Mars and the Graffiti Spirits Group.
Karl Chessell, business unit director for food and retail at CGA said that there were reasons to be optimistic, even though the licensed sector continued to contract.
“We are still seeing unsustainable pubs close, but collectively the rate of net number of pub, bar and restaurants closing is slowing,” he noted. “. Last year was not easy for some big restaurant brands, but smaller and medium sized brands are bringing new concepts to the market and successfully scaling up. All our research shows that consumers are still eager to go out to eat and drink, and they’ve never had it better for choice.”
AlixPartners’ managing director Graeme Smith said that overall, the eating and drinking out market remained dynamic and attractive to investors, and pubs and experiential businesses “took up the slack in investment activity from the more subdued restaurant sector”.
“Reduced political uncertainty, more positive recent trading results and encouraging returns when investing in sites, provide a platform for increased M&A and investment activity in 2020 across both wet-led and food-led concepts,” he said.
However Smith cautioned that investors would be looking carefully at the potential impact on trading from potential outbreaks of coronavirus (Covid-19).