It is the third year running in which pub company insolvencies have increased.

 

Cost hikes and the rise of teetotalism are to blame, says accountancy group UHY Hacker Young.

Figures show that the number of insolvencies of pub and bar companies has jumped by 13 per cent to 530 in the last year (year to end September 2019) up from 470 the previous year, according to Insolvency Service data.

UHY Hacker Young says that this is being driven by a sharp rise in pub costs, as well as the gradual slowdown in consumer spending in the sector.

Other factors include the rise in the minimum wage and changing drinking habits amongst millennials, with a significant jump in the number of young people that do not drink.Insolvency graphThe weakness in Sterling since the Brexit vote has added to problems, driving up the cost of imported drinks and weak consumer confidence means pubs have found it very hard to pass those cost increases to customers, said Peter Kubik, Partner at the firm.

"It is hard to see any short-term changes to the pressures on the pub sector," he said.

"That is not to say that the pub sector is in a hopeless situation. A lot of pub groups have improved profitability by adding more food sales and non-alcohol sales in order to increase footfall in slower periods of the week.

"Upgrading premises to maintain appeal with younger drinkers can also help cope with weaker sales amongst that group. However, developing a food offering or refurbishing requires capital. Smaller pub groups are finding it hard to get bank finance at the moment or non-bank finance at competitive rates.

"Hopefully, once the Brexit question is cleared up, high street lenders will be less nervous about lending to smaller pub companies."