Britain’s number of licensed premises has stayed level in the last year despite mounting cost pressures, patchy confidence and Brexit-related issues.
That is the headline finding of the December edition of the Market Growth Monitor from CGA and AlixPartners. It shows that Britain had 122,783 licensed premises in September 2017—a very small drop on the number three months previously, and virtually identical to the total in September 2016.
The Market Growth Monitor confirms the two main long-term trends in the licensed trade: a steady decline in Britain’s pubs and a steady increase in its restaurants, especially from casual dining groups. The tally of drink-led pubs has fallen by 2.3% in the last year, but restaurants have increased in number by 1.6% in the same period. As previous editions of the Monitor have revealed, that growth has been fuelled by start-up and medium-sized casual dining operators in particular.
The figures are a sign of confidence in the licensed sector at the end of a year characterised by increases in food, property and people costs. Uncertainty over the consequences of the UK’s decision to leave the European Union, especially around the crucial issue of migrant labour, has dented the sector too. CGA’s recent Business Confidence Survey revealed that just 30% of leaders felt optimistic about prospects for the eating and drinking out market over the next 12 months.
CGA and AlixPartners’ Market Growth Monitor also reveals a striking split in the crucial London market, with licensed premises in the centre of the capital still increasing but operators further out retrenching slightly. Restaurant numbers in inner London have increased by 3.1% in the year to September—but fallen by 0.3% in outer London.
New openings in London have been driven by small and medium-sized managed restaurant groups, which have respectively increased their number of sites by 75% and 94% in just five years. Large groups operate 53% of all managed restaurants in outer London—but just 30% in inner London.
CGA vice president Peter Martin said: “There is no escaping the fact that 2017 has been a very tough year for many pub and restaurant operators, with steep rises in food costs and Brexit just two of the big challenges. But these Market Growth Monitor figures are proof of the steely resilience of the sector and consumers’ continued appetite for eating and drinking out. Conditions aren’t about to get any easier next year, but there are reasons for cautious optimism as we draw towards the end of 2017.”
AlixPartners managing director Graeme Smith said: “At a site expansion level, the prevalent macro trends continue: a contracting pub market and the measured growth of food-led outlets. Although the market’s long-term fundamentals—including consumer demand—remain robust, the sector’s immediate trading performance is what positive operators are politely calling ‘soft’. Many parts of the market are currently under pressure, and like-for-like sales growth has slowed in a competitive environment. When combined with the backdrop of sustained cost inflation, profit growth is becoming harder to come by.”
The AlixPartners CGA Market Growth Monitor is produced quarterly and is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Great Britain.
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