Press Releases
07 June 2010
Number of bar and pub companies collapsing rises by 109% in last year
- 87 bar, pub and nightclub companies went bust in last 12 months
- Industry asks Government to act sympathetically in emergency Budget
The number of bar and pub companies going bust has continued to soar in the last year, defying the trend of falling corporate insolvencies across the rest of the economy says Top 22 accountancy firm Wilkins Kennedy.
23 pub, bar and nightclub companies have become insolvent in the first three months of 2010 alone, a jump of 109% on the 11 that went bust in the first 3 months of 2009.
In total 87 pub, bar and nightclub companies have gone bust in the last year (to March 31 2010), compared with 79 in the previous 12 months.
In comparison the total number of corporate insolvencies in the last year fell 36% to 5,911 from 9,233 in the previous year.
Wilkins Kennedy says that the sector clearly has not recovered from either from the impact of the recession or from the legislative and tax burden dropped on them from the last Government. Wilkins Kennedy says that the new Government must avoid weakening the sector further in the emergency Budget, on June 22.
Anthony Cork, Director, of Wilkins Kennedy comments: “What the pub and bar industry needs to see in the June 22 budget is an end to duty increases. The Government needs to be understanding of the sector and not tax it out of existence.”
“Such is the weak pricing power of much of the bar industry that bar operators have to either swallow tax increases themselves or lose custom to the supermarkets.”
Wilkins Kennedy says that the Governments proposals to review the current Licensing Act that could restrict opening hours for some establishments is a real risk.
Says Anthony Cork: “For many establishments, working on wafer thin margins and high fixed costs, any restriction in trading hours could tip them into loss.”
Wilkins Kennedy says one ray of light from the new Government is the new Social Responsibility Bill announced in the Queens Speech which may see the banning of the sale of alcohol below cost price and, therefore, lessen the competitive pressure from supermarkets.
Anthony Cork explains: “Bars continue to suffer an intense competitive threat from the buying might of the Big 4 supermarkets, undercutting local establishments and encouraging people to drink at home cheaply and “pre-loading” before coming out.”
“The choice available in supermarkets is so extensive that pubs can only compete on that aspect without reshuffling their contracts with suppliers and that can be difficult.”
Anthony Cork says that spending in bars that fell steeply because of the recession started its slide with the introduction of the smoking ban. Anthony suggests that because it was regulatory and legal changes that pushed the sector over the edge politicians have an obligation not to heap further pain on pubs and bars.
Anthony Cork adds: “Pubs and bar owners have been entrepreneurial and have followed the standard advice to try and transition into a more food led offering. But, this is not easy and can involve reskilling as well as alterations to the premises which are capital intensive. That solution to the woes of the sector seemed to assumed that the eating-out market could grow unchecked.”
ENDS
Press enquiries:
Anthony Cork
Director
Wilkins Kennedy
Tel: 020 7403 1877
Mobile: 078 8060 1962
Nick Mattison or Sarah Forsey
Mattison Public Relations
Tel: 020 7645 3636
Mob: 07931 685 714
