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Insolvency increase in pubs and bars

Posted: December 28, 2017

Many pubs and bars are struggling financially. There has been a 9% increase in the number of pub and bar companies becoming insolvent.

Lower consumer spending is decreasing the profit margins of many bars and pubs. Many people drink at home with their friends, and even large pub and bar owning companies have issued profit warnings.

Some large companies are using mergers or acquisitions to restructure their business. By increasing the scale of their activities, they can deal with squeezed profit margins.

To turn their finances around some companies are using short term bridging finance to raise money to invest in facilities that will increase revenue. They are putting on events to attract customers such as coffee mornings, themed party nights, live bands and specialist food.

If an energetic pub or bar management team has a detailed business plan for how they can turn their business around, a specialist lender may be prepared to offer a short-term bridging loan to provide capital for marketing, building new facilities and extensions. It is easier to obtain a loan for a company that owns property as buildings can be used as security for the loan. A bridging finance broker can find the best loan deals.

There are still good business opportunities in the hospitality industry despite the challenges. Companies that manage pubs and bars need to take pro-active action to increase business and may find that a specialist bridging lender can help provide the finance to re-launch a pub or bar.