Pub insolvencies drop by a third

13th July 2010, 9:28am

Pub insolvency rates are down a third from the peak of the recession, according to research by PricewaterhouseCoopers (PwC).

However there are fears that further Government spending cuts, potential interest rate rises, and a reduction in discretionary spend could slow recovery – causing a further wave of restructuring and insolvency.

The insolvency rate appears to have peaked in the last quarter of 2009 when 88 pubs businesses failed. The rate of failure has now (Q2 2010) dropped by 32%. However, the level of collapse is still comparatively high - nearly 10% up on just two years ago.

In the first half of 2010 London based companies such as London Town, Capital City Brewing Company Ltd, and Globe pub management became insolvent, as did several large late night venues such as Fabric nightclub and the Budha Bar. 

David Chubb, partner, PricewaterhouseCoopers LLP, said: "Pub company insolvency rates have fallen from where we were a year ago – but trading remains difficult and further failures are expected as lenders consolidate their positions. The insolvency stats do not fully illustrate the extent of the problems in the sector as much underlying restructuring activity continues. Even without entering insolvency creditors may still experience pain." 

He continued: "Generally insolvency rates increase as an economy clambers out of recession - due to working capital pressures. However, as pubs are not vulnerable to working capital any signs of a UK recovery, when they come, will be good news for the pub industry."

Meanwhile restaurant company insolvency levels in Q2 2010 are up 5% on the first three months of the year, but down 30% from their peak of 183 in Q1 2009.

"While the propensity to dine out is still very much a part of UK culture, the pursuit of value for money by the consumer has led to even high end restaurants in London laying on fixed menus and other offers usually seen in casual dining." 

"Restaurants must use their customer data to analyse whether such offers are bringing new customers through the door or whether their regulars, who would dine regardless, are just doing so and paying less."

Related Articles:

• 19 Jan 2009 - Pub closures climb towards six a day

Click here to submit a comment!

Have your say!

To comment on this article, simply enter your name and email and send us your views. Please note that your comment will appear publicly below this article once it has been processed. For enquiries please email info@eatoutmagazine.co.uk.