Alarm bells for on-trade in 2011

Accountancy firm Baker Tilly has warned that “tough times remain ahead for licensees” in a report released last week. The report claims that “one in every three licensed operators saw a 10% or more fall in operating profit in their latest filed accounts.”

Using data from the Office for National Statistics, the report, published in partnership with consultants Licensed Solutions, noted: “While insolvency figures in the licensed trade in Q3 2010 show a slight decline from Q2 and are broadly half the level of the corresponding quarter last year, they are expected to rise again in 2011.”

Simon Bower, partner at Baker Tilly Restructuring & Recovery, explained: “The public sector cuts already seem to be having a negative impact on consumer confidence and there is early evidence of spending being reined in.

“We expect that the anticipated impact on employment will further influence consumer confidence, and as a result, spending.”

Looking towards the end of 2010 and beyond, Bower predicted: “Operators with large estates, especially at the ‘value’ end should continue to trade well to the end of 2010. It will be in the first quarter of 2011, when the industry will be hit with the double whammy of a traditionally quiet trading period and the increase in VAT, that challenges will increase.”

If the impact from this proves as severe as expected, Bower suggested that “a ‘dry’ first half of next year might see many licensees hoping that the royal wedding celebrations will get corks popping again in the industry.”

For a full copy of the report, click here

Gabriel Savage, 07.12.2010