Hospitality Market Monitor – 2022 closures eclipse those of COVID-hit 2021 as cost pressures mount

Unprecedented inflation in energy bills and other costs has led to a net decline of 1,611 licensed premises in the fourth quarter of 2022, the new Hospitality Market Monitor from AlixPartners and CGA by Nielsen IQ has revealed.

This represents a 1.6% contraction of the market in just three months, equivalent to nearly 18 net closures every day. Across the whole of 2022, hospitality recorded a drop of 4,809 premises, or 4.5% of the total present at the end of 2021, with more than three quarters of the closures occurring in the second half of the year. This figure is more than 40% higher than the total net closures seen during COVID-hit 2021.  

While the fundamental, longer-term outlook for the sector remains strong, these latest figures graphically illustrate the immediate and considerable challenges that stand in the way of many businesses and their future. Operators across the industry are grappling with a cost base that has spiralled – for some, beyond all recognition – such that some businesses are not currently viable. 

These latest figures are a stark snapshot of what the sector has faced over the course of the past three years. In that time, 13,037 sites have been lost – more than 10% in three years and equivalent to 13 closures every day.

While in the final quarter of 2022 some segments remained resilient, with modest declines (such as community, food, and high street pubs), others came under increased pressure – especially the casual dining sector – as costs and industrial action took their toll. Nightclubs again bore the brunt, with this segment now nearly a third smaller than it was before the pandemic.

It is clear is that absent further government support, the energy crisis has the potential to take a bigger toll on hospitality than COVID, with independents suffering disproportionately. Not every business is in jeopardy, but it’s clear that even the stronger operators with robust balance sheets are opting to conserve their cash and wait out this storm.