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Nightclubs lose 17% of venues after pandemic

The UK nightclub sector has seen 17% of its venues disappear since March 2020, according to a report by UK Hospitality and CGA.

As of December 2021, there are 1,035 nightclubs in the UK

The 10th issue of the Future Shock – Hospitality in 2022 report, created by trade body UK Hospitality and data specialist CGA, explored the state of the nation’s pubs, bars, restaurants and nightclubs.

Following the pandemic, 9% of licensed premises have disappeared in the 18 months to September 2021. This represents a net loss of 9,900 premises, equivalent to a drop of around 550 venues per month.

By segment, nightclubs and casual dining chains were hit the hardest – both at a loss of 17% between March 2020 and December 2021. There are now 1,035 nightclubs in the UK.

Bars lost 1% of venues over the period, while bar-restaurants were at a 9% loss and restaurants declined by 10%.

UK Hospitality said venues now face a ‘tsunami of soaring costs’ since the start of the pandemic, as energy prices skyrocket.

The trade group noted that operators face a 19% rise in labour costs, a 17% hike in food prices and a 14% increase in drink costs. Venues are expected to pass on an 11% rise in prices to consumers, UK Hospitality warned.

The report highlighted that 70% of consumers are now concerned about their long-term finances and more than half (55%) are more worried about their personal finances than they were a year ago.

The majority of consumers (85%) are expecting prices in pubs and restaurants to increase this year, which would lead to a drop in footfall and revenue for the sector, the report noted.

Government support needed

UK Hospitality chief executive Kate Nicholls said: “Our analysis shows that the sector will likely be contributing 1.7 percentage points to the national rate of CPI [Consumer Price Index] and that the biggest contributing factor will be the planned increase in VAT from 12.5% to 20% this April. This will compound all the other cost increases, and further squeeze businesses.

“With positive action from government, however, such as keeping VAT at 12.5%, the sector can be part of the solution to the cost of living crisis.”

The report also noted that independent and leased businesses were more affected by the pandemic than chains, with site numbers falling by 8% and 9% respectively since March 2020. In comparison, managed businesses lost 4% of venues.

Karl Chessell, director, hospitality operators and Food, EMEA, said: “Trading for managed groups is edging back towards pre-Covid levels. Consumers and business leaders are recovering their confidence and site openings are heading in the right direction.

“Hospitality businesses now face a variety of new challenges and threats which come at the worst possible time for businesses, and they need sustained help from government. Hospitality is ideally placed to power the UK’s economic recovery.”

The Covid-19 pandemic has cost the UK hospitality sector £114.8 billion (US$156.3bn) in lost sales over two years, according to UK Hospitality.

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