Pub insolvencies fall 7%

The leisure sector lender revealed that there had been a steady decline in the number of firms going insolvent thanks to the opportunity of replacing scarce bank funding with alternative finance or debt from non-bank lenders.

Over the last three years, insolvencies by pub and bar companies fell by 16%.

 

Ortus believes that alternative lending has helped many firms transform their profitability by being able to offer craft beers and more expensive ‘hipster’-style food.

Funding has also allowed pubs and bars to invest in furnishing, beer gardens as well as new kitchens and, in some cases, develop their own microbrewery inside the pub.

“There is a real desire among a large demographic to spend on super premium drinks like ‘brewery fresh’ or ‘unfiltered’ artisan lager or small batch and exotic botanical gins,” said Jon Salisbury, managing director at Ortus Secured Finance.

“Successfully tap into that super premium market and you can transform your margins. A £5 pint no longer raises eyebrows.”

Ortus felt that when customers were prepared to pay higher amounts on alcohol, it was more likely that they would pay a high price for food. 

The lender also felt that the 2003 Licensing Act had also given a boost for pub companies as later opening hours allowed them to compete with nightclubs.

“With insolvencies steadily declining in the last few years, it’s clear that the pub sector is performing well.

“A key driver for this decline is the availability of finance for the sector. 

“Small and big pub companies alike are becoming increasingly aware of alternative finance and the value continued investment can have for their business.

“For small pub and bar companies especially, it’s crucial that they have access to alternative finance providers who are able to help them invest in their business – helping them become direct competitors of the larger, more well-known pub brands.”