Any buyers on the look-out for bar or pub businesses could soon have a wide range to choose from, as the tougher lending climate is forcing an increasing number into administration.
In the third quarter of 2011, 13 bars, mainly outside London, went into administration. This was more than double the number that failed in the second quarter, according to the figures from restructuring firm Baker Tilly.
One of the most high profile cases came from the London-listed nightclub operator, Luminar, which fell into
administration in October after failing to meet its debt obligations to several banks.
In light of such cases, it’s not difficult to see why banks are cautious about lending to drink-led businesses. However, it seems that the lack of banks’ willingness to lend money to cash-poor operators, together with falling consumer confidence, is proving a lethal combination for many bars and pubs.
One of the main factors affecting bar operators is their reliance on the 18 to 24-year-old demographic, which has been severely hit by the recession and unemployment. The number of bars and pubs being put up for sale in the final quarter of this year and the first quarter of 2012 could well return to the kinds of figures we last saw back at the end of 2009.
This buyers’ market is bound to prove attractive to those looking for a new bar or pub project, with plenty of scope for success for those willing to diversify into food offerings or targeting a more mature clientele, for example.
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