Number of bar and pub companies collapsing rises by 109% in last year

7th June 2010, 12:03pm

The number of bar and pub companies going bust has continued to soar in the last year, defying the trend of falling corporate insolvencies across the rest of the economy.

Accountancy firm Wilkins Kennedy said that 23 pub, bar and nightclub companies have become insolvent in the first three months of 2010 alone, a jump of 109% on the 11 that went bust in the first three months of 2009.

In total 87 pub, bar and nightclub companies have gone bust in the last year (to March 31 2010), compared with 79 in the previous 12 months.

In comparison the total number of corporate insolvencies in the last year fell 36% to 5,911 from 9,233 in the previous year.

Wilkins Kennedy says that the sector clearly has not recovered from either from the impact of the recession or from the legislative and tax burden dropped on them from the last Government. Wilkins Kennedy says that the new Government must avoid weakening the sector further in the emergency Budget, on June 22.

Anthony Cork, director of Wilkins Kennedy comments: "What the pub and bar industry needs to see in the June 22 budget is an end to duty increases. The Government needs to be understanding of the sector and not tax it out of existence."

"Such is the weak pricing power of much of the bar industry that bar operators have to either swallow tax increases themselves or lose custom to the supermarkets."

Wilkins Kennedy says that the Governments proposals to review the current Licensing Act that could restrict opening hours for some establishments is a real risk.

Cork added: "For many establishments, working on wafer thin margins and high fixed costs, any restriction in trading hours could tip them into loss.

"Bars continue to suffer an intense competitive threat from the buying might of the Big 4 supermarkets, undercutting local establishments and encouraging people to drink at home cheaply and "pre-loading" before coming out."

"The choice available in supermarkets is so extensive that pubs can only compete on that aspect without reshuffling their contracts with suppliers and that can be difficult.

"Pubs and bar owners have been entrepreneurial and have followed the standard advice to try and transition into a more food led offering. But, this is not easy and can involve reskilling as well as alterations to the premises which are capital intensive. That solution to the woes of the sector seemed to assumed that the eating-out market could grow unchecked."

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