UK Hospitality Industry Faces Wave of Closures Amid Mounting Costs
Posted by Emma on 29th Jan 2025
Britain's hospitality sector is teetering on the edge, with industry analysts warning of nearly 3,000 venue closures in 2025 if current trends persist. According to the latest Hospitality Market Monitor from CGA by NIQ and global consultancy firm AlixPartners, 748 hospitality venues closed between October and December 2024—an average of more than eight closures per day.
Despite this worrying trend, the report also highlights an overall stability in site numbers over the past year. In December 2024, 99,120 hospitality outlets were operating across the UK, which remained almost unchanged from 99,113 in December 2023. This relative steadiness starkly contrasts previous years when the sector shrank by 4.5% in 2022 and 2.9% in 2023. However, experts caution that these figures obscure the industry's rapid churn rate, with closures and openings happening at an accelerated pace.
The report found that 4,078 venues shut down in 2024, while 4,085 new outlets opened—equating to an astonishing turnover of 11 venues per day. While this suggests entrepreneurial resilience, it also reflects the harsh realities of an industry struggling to adapt to shifting consumer preferences, rising operational costs, and economic uncertainty.
Among the key findings:
- Drink-led venues saw a slight increase of 0.5% over the past year.
- Independently run food-led sites experienced 1% growth.
- Multi-site food-led venues recorded a 3.2% decline, underscoring challenges for larger hospitality groups.
- The last quarter of 2024 saw a 0.7% contraction, with 748 net closures—a troubling trend that, if sustained, could result in 3,000 venue losses by the end of 2025.
Karl Chessell, Director at CGA by NIQ, acknowledged the sector's resilience but warned of growing financial pressures: "Given all the challenges thrown at hospitality in 2024, stability in site numbers shows the impressive resilience of operators. However, we continue to see a rapid churn of sites as the sector adapts to consumers' changing habits, while hundreds of net closures in the final quarter of the year emphasise that the burden of costs—made even heavier by the Autumn Budget—is threatening hospitality's fragile renewal."
Chessell also noted that the post-Christmas period has already seen additional closures, with economic uncertainty keeping many businesses on the brink.
Similarly, Graeme Smith, Managing Director at AlixPartners, anticipates further struggles: "While we expect the consumer outlook to improve and mergers and acquisitions to build as we move further through the year, many businesses will remain vulnerable. We expect the turnover of sites will continue too, as operators increasingly focus on core operations, close ancillary sites and reassess opening pipelines."
He added that restructurings and rescue deals will likely become a regular feature of the business cycle in the coming months.
While consumer spending and investment in the sector may improve, the outlook remains fragile. The report indicates that operators must adapt swiftly— streamlining operations, pivoting business models, or leveraging new investment strategies—to survive in an increasingly competitive and costly environment.
With nearly 3,000 potential closures, the hospitality sector faces a defining year ahead. Will resilience and adaptation be enough to withstand the mounting financial pressures, or is the industry bracing for another period of contraction?