The hospitality sector is on a “much surer path”, say experts as it records its first quarter-on-quarter growth in outlets in two years.
The new Hospitality Market Monitor from CGA by NIQ and AlixPartners shows a 0.5% increase in the number of licensed premises between March and June 2024, equivalent to 462 net new openings, or five per day. It is the first increase since mid-2022 and only the third since the start of Covid in early 2020.
Second-quarter growth was even across the different sectors of hospitality and extended to the independent segment, where numbers increased by 0.5% to end several years of sustained closures caused by severe cost and Covid-related pressures.
The upward trend is in line with other positive indicators from 2024, including solid growth in sales, an easing of inflation and household bills. However, while quarter-on-quarter movements are positive, longer-term comparisons are weaker, with outlet numbers down by 1.0% or 969 from June 2023. Britain’s total sites are still 13.8% below the pre-Covid figure of March 2020.
The latest Hospitality Market Monitor from CGA and AlixPartners highlights particularly positive developments in the casual dining sector. After a rapid expansion of managed chain restaurants in the 2000s and 2010s, there were 6,696 casual dining sites at March 2020—but COVID-19 and high inflation then saw the segment slashed by 24.1% to 5,082 sites by June 2023 – a total of 1,611 net closures or just over one per day. However, the figure has risen by 1.7% in the last 12 months, with an average of three net new sites a week in the first six months of 2024.
Karl Chessell, CGA by NIQ’s director – hospitality operators and food, EMEA, said: “These numbers are a welcome sign of the confidence of business leaders and investors in hospitality. While it’s too early to be sure that hospitality’s downward trend in outlets has bottomed out, alongside solid sales growth over the first half of 2024 these figures indicate the brightest outlook for the sector for some time. Cost pressures mean thousands of businesses remain fragile and millions of consumers’ discretionary spending continues to be tight, and hospitality may never fully return to its pre-Covid size in outlet terms – but it’s clear that it is now back on a much surer path.”
Graeme Smith, managing director at AlixPartners, added: “The return to outlet growth reflects the stabilisation of the market and paints a more positive picture for businesses and investors alike, with this growth acting as a marker for the recovery of the industry. We expect to see this growth develop as confidence continues to rise in the second half of the year.”
