Britain’s pubs, restaurants and hotels market has achieved marginal growth in outlets over the last 12 months, the new Hospitality Market Monitor from CGA by NIQ and AlixPartners shows – but significant new costs may now jeopardise stability.
The report indicates a total of 98,866 sites operating in March 2025 – 0.1% more than 12 months ago. However, the latest quarter (January to March 2025) saw numbers fall 0.3% down, from the end of 2024, which is equivalent to 20 net closures per week between January and March.
The contraction in the number of licensed venues reflects concerns among operators and investors about soft consumer confidence, weak sales growth in pubs, bars and restaurants and the general economic outlook, as well as the burden of increased employer National Insurance contributions and National Minimum Wage from April.
The Hospitality Market Monitor reveals more key trends in openings and closures across the hospitality sector. They include greater solidity on the managed side of hospitality than in the independent sector, with the two gaining and losing 0.3% of sites respectively in the first quarter of 2025. There has been similar churn in venue types, as food-led licensed premises shrank 1.1% while drink-led ones grew 0.3%.
The report also highlights growth areas of hospitality despite ongoing challenges, like the expansion of bars powered by competitive socialising concepts. There are now 2.8% more bars than at March 2020, which makes it the only segment to have grown in size since the start of the Covid. The ‘themed bars’ segment of CGA’s outlet data – into which dedicated competitive socialising venues fall – has grown by 24.3% in the last 12 months, and is now nearly treble the size it was at March 2020.
Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “After a welcome year of consolidation in hospitality and solid Christmas trading, a contraction in outlets in the first quarter of this year indicates a less positive direction of travel. On top of negative growth for leading operators and patchy confidence among consumers and business leaders, it suggests 2025 will be another challenging year for the sector. Most concerning of all is the wave of new costs that are faced by businesses from April. There are encouraging pockets of vibrancy, and we can be optimistic that spending may pick up later in the year, but it is likely to be a difficult second quarter for businesses that have already been weakened by sustained high inflation.”
Graeme Smith, a senior partner at AlixPartners, said: “In the context of what has happened to market site numbers in the recent past, the last 12 months represent a period of relative calm and stability. However, this belies a sense that the market is on the cusp of further, possibly accelerated, change.
“The Budget has lifted the cost base materially for the sector and operators are consequently working through every line of the P&L, reviewing operating models and trading estates – and inevitably headcounts, too, as these tax changes filter through. Tariffs have only heightened the need for this review process, having recently led to further volatility and having impacted the alcohol industry’s cost base.
“Consolidation-driven M&A, refinancings and restructurings are likely to play a role in helping operators unlock a profitable path, and while closures feel inevitable, it is also a time when the strongest – those thriving hospitality brands and businesses, of which there remains many – will get stronger. And they will emerge in prime position to best access the market opportunities that will inevitably arise in the next 12 months.
“This data also shows how important it is to look at the facts and not just the perceptions. Following recent commentary, it would have been easy to assume that the UK consumer had stopped going out and the nighttime economy was dead. However, the data shows that whilst tastes might be changing, the UK consumer still wants to go out and socialise with bar numbers increasing by over 7% compared to a year ago – the highest growth of all categories.”
Kate Nicholls, chief executive of UKHospitality, added: “The loss of 20 venues a week so far this year shows the real-life impact of the increasing cost burden on hospitality. These are livelihoods, jobs and cherished community venues that have been lost for good, and that is hugely damaging to our economy, society, culture and wellbeing.
“Throughout last year, there had been some much-needed stabilisation and growth in the market, after several years of significant losses after the pandemic. The £3.4 billion in costs hitting the sector has clearly sent that trend into reverse.”
