UK hospitality sees summer spending slowdown
Spells of hot weather failed to revive the UK on trade in July, which saw licensed outlet numbers fall by almost 1% versus July 2024, with London closure rates double the national average.
The UK hospitality sector is facing “one of the toughest mid-summer trading environments in years,” said The Oxford Partnership CEO, with falling outlet numbers, declining draught volumes and slowed spending.
New data from The Oxford Partnership’s Market Watch, in collaboration with Vianet, revealed the UK On Trade closed July on a weak note. Licensed outlet numbers dropped by almost 1% compared to July 2024, with London experiencing closure rates double the national average.
Alison Jordan, CEO of The Oxford Partnership, said: “The data shows the sector is under sustained pressure. Even with hot weather, trading momentum failed to materialise, and the combination of rising costs, slowing spend, and declining volumes is creating one of the toughest mid-summer trading environments we have seen in years.”
Economic headwinds
Jordan urged operators to focus on converting longer customer visits into higher spend to offset the economic headwinds.
Operators are facing a combination of rising National Insurance contributions, reduced business rates relief, and higher minimum wage costs.
These pressures come as inflation and high interest rates continue to restrict consumer spending power, with BBPA predicting one pub will close per day in 2025. BrewDog recently announced it would axe 10 sites, with cocktail chain Simmons and pub group Oakman Inns entering administration this month.
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Football across the on trade remained broadly flat over the past month, but dwell times rose 13% year-on-year, suggesting customers are visiting less often but staying longer when they do.
Summer spending slowdown
In Yorkshire, dwell time ticked up 18% despite a small drop in footfall. This implies consumers are consolidating their social occasions and potentially focusing spend into fewer visits.
Furthermore, average spend growth per head is slowing sharply. Year-to-date drinks growth eased to 3.9% and food to 5% in the last 12 weeks, and drinks spend slowed to 1.8% and food to 1.9%, both well below the 3.6% Consumer Prices Index.
This means pubs and restaurants are seeing a significant drop in spend per customer.
Draught beer and cider volumes are also under pressure, down 2.4% year-to-date, with sharper declines in recent weeks.
London remains the weakest region, down 6.4% in the latest four weeks. Earlier summer gains in rural areas have now reversed, while suburban and urban venues remain in decline.
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