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The study, by private equity investment firm Growthdeck, shows that 1,730 UK pubs and bar companies have run so short of cash and other finance that their directors have had to make loans to them from their own personal resources. Many of those loans are for more than £200,000. This was despite government-backed lending schemes such as CBILS and BBLS.
Pubs and bars, even those operating at a profit, have found it increasingly difficult to borrow over the last decade, with high street banks tightening their lending criteria for businesses deemed to be high risk, limiting lending to SMEs.
Owners of pubs and bars may have found it difficult to access funds through CBILs and BBLs as lenders favoured other sectors, such as tech and healthcare. This is likely to have prompted more of them to put their own money on the line.
Given the surplus of lower cost leisure space available, Growthdeck says there is scope for pubs and bars to see a profitable rebound, provided they have access to funds to enable them to grow.
The increase in domestic tourism, which saw a 35 percent jump in the number of staycations, has been a boon to the UK hospitality sector.
Sales in pubs and bars in August were 35 percent higher than the same month in 2020 and up by five percent compared with August 2019.
Steve Talbot, investment director at Growthdeck, said: “The pub and bar sector has endured a difficult 18 months. Many owners have had to use their own money to stay in business as traditional funding options have been restricted.”
“However, the hospitality sector now faces a unique opportunity. The impact of the pandemic on the high street has led to an excess of prime sites at attractive rents and much less onerous lease terms.
“A lot of competition has been removed from the industry and the prospect of a bounce back in trading for the right concepts looks strong.”
In the summer, Growthdeck closed £4.3million of funding for new bar group Maven Leisure, completing the investment firm’s largest single raise.
Talbot added: “Pub and bar companies with access to the right finance have an excellent opportunity to expand and grow. Investors should not underestimate the considerable growth potential of the hospitality sector.”
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