What directors can do to protect themselves

We’ve already written previously about some of the issues facing pubs this autumn but some new research underlines how precarious the position for them and nightclubs could be approaching the end of the year.

In the past three months alone, 150 pubs have closed and have either been demolished or converted into another type of building such as offices or homes. 

This is up 50% on the 200 which have been lost for good to the public during the first six months of 2022. 

The Night Time Industries Association (NTTA) forecasts that due to soaring energy bills, up to seven in ten pubs could be vulnerable to closure even with additional government support until March 2023.

 Additionally Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) thinks that losing out on a business rates discount in April and any benefit from next year’s revaluation could be potentially wiped out by inflation if it remains historically high.

She said: “Unfortunately the deeply alarming numbers of pubs disappearing is unfortunately not surprising. 

“Pubs are desperately trying to keep their doors open but have come up against hurdle after hurdle in their Covid recovery.

“While the government has pledged to offer businesses a six-month support scheme on energy bills and other support measures, publicans were still mostly in the dark about how helpful this aid would be. 

According to figures from the Night Time Industries Association (NTIA), the number of UK nightclubs has now dropped to its lowest level in more than 20 years with one in five (20%) closing in the past three years alone.

An NTIA spokesperson explains the decline comes down to a “perfect storm” of events such as “pandemic debt, growing energy bills, workforce challenges, supply chain issues, increased insurance premiums, landlord pressures and product cost increases.”

They also report that the immediate future outlook also doesn’t look much better. 

“Operating cost pressures coupled with consumers with less disposable income have seen the early stages of a possible recession with slowing ticket sales and visitor frequency.” 

It doesn’t have to be last orders

So why does the fate of the pub, nightclub and other hospitality businesses matter so much – apart from being essential to a happy life?

Kate Nicholls, Chief Executive of UKHospitality, the trade body for the sector, makes the case strongly. 

Speaking after the Office for National Statistics revealed that the UK economy contracted by 0.3% in August she said: “The fall in GDP attributed in part to the slowdown in consumer facing industries with slower growth in hospitality. This reinforces the fact that when hospitality fires on all cylinders, the economy grows.”

Consumer facing services including hospitality fell by 1.8% in August despite growing 0.7% in July with accommodation and food service activities decreasing by 0.6%.  Arts, entertainment and recreation activities also all fell by 5%. 

Additionally, new data from Barclaycard showed consumer card spending in restaurants had fallen 12.2% in September while spending in bars, pubs and clubs also decreased for the first time since March 2021 with a 0.4% decline. 

If customers are already cutting back their spending in the hospitality sector, then pubs, clubs, restaurants and other hospitality businesses should use the time they have now to make some important changes. 

What decisions and changes they can make depends entirely on their individual situations but a free initial consultation with one of our expert advisors will give them a clearer indication of where they are and more importantly, what they can do in the short and medium term to make things better. 

So whether it’s an insolvency measure such as administration or a CVA to buy more time for a fundamentally sound and profitable business or a liquidation to free others and allow them to pursue new ventures – we can talk you through all the options available so you can start to look forward to a busy winter instead of wondering if you’ll even get there.