One in 18 operators lost in past year

Smaller businesses have borne the brunt of closures, and the independent segment has shed 7% of outlets in the last 12 month, in contrast to the small growth of 0.1% in the managed hospitality sector.

However, the Hospitality Market Monitor also reveals signs for cautious optimism.

There were 1,895, net closures across the first half of 2023, less than half the 3,841 seen in the second half of 2022, and some units vacated recently have been repurposed by other operators including emerging groups.

Food-led pubs, high street pubs, and community pubs have all recorded notably fewer closures than the sector as a whole.

In addition, Britain's city centres are showing growing resilience, with a 4.2% net fall in licensed premises in the 12 months to June 2023. It follows a steady return of commuters and visitors to major hubs, and an increase in residents in central areas of many of the country's largest cities in recent years.

Karl Chessell, CGA by NIQ's business unit director, hospitality operators and food, EMEA, said: "It's been another tough quarter for hospitality, with soaring energy, food and labour costs squeezing businesses' margins and inflation and interest rate rises sapping consumer confidence.

"Against that backdrop, managed groups have been impressively resilient in many segments and areas, and there are welcome signs that city centres in particular are back to their pre-COVID vibrancy. More venue closures are sadly inevitable while costs remain so high, but the outlook for well-resourced, distinctive and customer-focused groups remains good."

Graeme Smith, AlixPartners' managing director, said: "It is clearly a very difficult time for some hospitality businesses right now, as these latest numbers illustrate. But part of the story here is the remarkable resilience and robustness of large swathes of the market in the face of a challenging, high-inflation environment.

"Despite the current cost-of-doing-business crisis, which has served to squeeze profitability, suppress investment and, in the worst scenarios, challenge viability, a number of segments of hospitality and leisure are holding up extremely well. And this, in a market that was already challenged and in recovery mode after the events of the past three years.

"While every business lost is a tragedy, many more are managing to navigate their way through. We are all waiting for this margin-compression cycle to turn, and when that switch comes, the market will, from an investment and lending perspective, right itself quickly. Investors will return, with businesses that have delivered stability and are able to demonstrate growth, top of the agenda."