Hospitality Market Monitor – Hospitality market stability under threat from new wave of government costs

Britain’s pubs, restaurants and hotels market has achieved marginal growth in outlets over the last 12 months, the new Hospitality Market Monitor from CGA by NIQ and AlixPartners shows – but significant new costs may now jeopardise stability. 

The report indicates a total of 98,866 sites operating in March 2025 – 0.1% more than 12 months ago. However, the latest quarter (January to March 2025) saw numbers fall 0.3% from the end of 2024, which is equivalent to 20 net closures per week between January and March. 

The contraction in the number of licensed venues reflects concerns among operators and investors about soft consumer confidence, weak sales growth in pubs, bars and restaurants and the general economic outlook, as well as the burden of increases to employer National Insurance contributions and the National Minimum Wage from April.

The Hospitality Market Monitor from CGA by NIQ and AlixPartners reveals more key trends in openings and closures across the hospitality sector. They include greater solidity on the managed side of hospitality than in the independent sector, with the two gaining and losing 0.3% of sites respectively in the first quarter of 2025. There has been similar churn in venue types, as food-led licensed premises shrank 1.1% while drink-led ones grew 0.3%. 

The report also highlights growth areas of hospitality despite ongoing challenges, like the expansion of bars powered by competitive socialising concepts. There are now 2.8% more bars than at March 2020, which makes it the only segment to have grown in size since the start of the COVID-19 pandemic. The “themed bars” segment of CGA’s outlet data– into which dedicated competitive socialising venues fal– has grown by 24.3% in the last 12 months, and is now nearly treble the size it was at March 2020.

AlixPartners' Partner and Managing Director Graeme Smith said: “In the context of what has happened to market site numbers in the recent past, the last 12 months represent a period of relative calm and stability. However, this belies a sense that the market is on the cusp of further, possibly accelerated, change.

“The Budget has lifted the cost base materially for the sector and operators are consequently working through every line of the P&L, reviewing operating models and trading estates – and inevitably headcounts, too, as these tax changes filter through. Tariffs have only heightened the need for this review process, having recently led to further volatility and having impacted the alcohol industry’s cost base.

“Consolidation-driven M&A, refinancings and restructurings are likely to play a role in helping operators unlock a profitable path and, while closures feel inevitable, it is also a time when the strongest – those thriving hospitality brands and businesses, of which there remain many – will get stronger. And they will emerge in prime position to best access the market opportunities that will inevitably arise in the next 12 months.” 

“This data also shows how important it is to look at the facts and not just the perceptions. Following recent commentary, it would have been easy to assume that the UK consumer had stopped going out and the nighttime economy was dead. However, the data shows that while tastes might be changing, the UK consumer still wants to go out and socialise with bar numbers increasing by over 7% compared to a year ago – the highest growth of all categories.” 

Read the full Q1 2025 Hospitality Market Monitor below or download it as a PDF.