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Graeme Smith
Partner & Managing Director, EMEA Leader, Risk Advisory
London
Britain’s number of licensed premises increased by 0.7% between July and September 2024, the Q3 2024 Hospitality Market Monitor from AlixPartners and CGA by NIQ reveals – equivalent to 661 net new openings, or 7 per day.
With a current total of 99,868 licensed premises, we are now back to almost exactly where we were at this time last year, and tantalisingly close to the milestone of 100,000 sites.
As this data shows, nine of the 11 key channels tracked by the Hospitality Market Monitor were in quarter-on-quarter growth. It was particularly impressive in drink-led segments including high street pubs (see page 2), while the cautious revival of casual dining outlets (up 0.5%) and other restaurants (up 0.6%) goes on.
The best news of all comes from the independent side of the market. Small businesses have borne the brunt of the double whammy of COVID and high inflation, and the indie segment is now 15.9% smaller than it was in March 2020. However, after contracting every quarter for four years, it has now been in growth for two in a row. Site numbers increased by 447 in the three months to September, which translates to just over 5 net openings every day.
Caution is needed here, as thousands of small hospitality venues remain fragile, and more failures can be expected. But for now at least, closures are being outnumbered by the number of entrepreneurs starting new ventures – often in units that have just been vacated. After a tough four years, it is a welcome indication of vibrancy in the independent sector.
Graeme Smith, AlixPartners’ managing director, said: "In the absence of a Budget that brought the spectre of significant challenges for the hospitality sector, these latest findings would have provided some grounds for optimism. Two successive periods of quarter-on-quarter growth in site numbers – a key proxy for the health of the sector – demonstrates an impressive resilience, and would have signalled some very welcome stability for the industry.
"Notably, growth across the key cohort of independents – the entrepreneurial lifeblood of the sector – was significant given these businesses have been hit hardest by the headwinds the industry has faced into since 2020. They continue to play an important role in rejuvenating high streets up and down the country. These latest figures also highlighted some cautiously positive trends for pubs – another cornerstone in the make-up of local communities.
"However, some very significant challenges remain; the plans set out in the October 2024 Budget mean we must view these latest figures through an extremely cautious lens. To what extent, hospitality businesses can bear the increasing tax burden, whilst continuing to invest and create jobs, remains to be seen, and the mood music from industry leaders to the new government’s maiden Budget has been one of abject frustration and disappointment. There is the hope that the increase in the National Living Wage may encourage customers to spend more and businesses should look to benefit from this while it lasts.
"If there are positives it maybe that the muscle memory of the past four years will fortify operators in the face of renewed challenges. With many businesses now looking to further consolidate their estates, market flux and churn may well create more opportunities for others.
“Stepping back, and weighing this latest market monitor picture against the Budget, the hope is that the positive momentum of the past six months will not entirely stall, and that enough businesses in the sector will continue to invest. At this point, given initial industry reaction it does seem that this remains the hope, rather than the market’s expectation.”
Read the full Q3 2024 Hospitality Market Monitor below:
