Budget ‘severely dents’ confidence in continued growth as number of licensed premises rises
The report shows a 0.7% rise in outlets between July and September 2024 — equivalent to 661 net new openings, or seven per day. It follows 0.5% growth in the second quarter of the year, which was the first positive quarter-on-quarter movement since mid-2022.
However, confidence for continued growth has been stifled by the Government's Autumn Budget, which saw businesses hit with rising employment tax measures, as well as a hike in business rates.
“In the absence of a Budget that brought the spectre of more challenges for the hospitality sector, these latest findings would have provided some cause for optimism,” says Graeme Smith, AlixPartners’ managing director.
“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 signalled some very welcome stability for the industry.
“However, significant challenges remain; the plans set out in the October 2024 Budget mean we must view these latest figures through an extremely cautious lens.
“The hope is that the positive momentum of the past six months will not entirely stall, and that the sector will continue to recover.”
According to the Monitor, hospitality’s recovery in the independent sector is ‘particularly fragile’ and is now 15.9% smaller than it was in March 2020 having been weakened by Covid-19 and high inflation.
After contracting every quarter for four years it has now been in growth for two quarters in a row, and site numbers increased by 0.7% in the three months to September.
Some ‘cautiously positive’ trends in local pubs are also noted.
There are now 12% fewer community pubs than there were before Covid, but the number rose by 0.4% between June and September.
The high street pub segment, meanwhile, is 3.8% larger than three months ago.
In total, the latest increase in licensed premises brings Britain’s total sites to 99,868 — virtually level with the figure 12 months ago.
“Two successive quarters of growth in site numbers is an encouraging sign of hospitality’s strength in the face of major challenges,” says Karl Chessell, CGA by NIQ’s business unit director – hospitality operators and food, EMEA.
“While the sector is smaller in outlet terms than before Covid, the last six months have shown that hospitality groups, investors and entrepreneurs have been confident enough to be opening rather than retrenching.
With inflation, GDP and other economic indicators moving in the right directions, the sector should be looking forward to 2025 with guarded optimism.
“However, with substantial extra costs on labour and rates now looming, there is a real danger that hospitality’s momentum will be lost.”
