The total number of licensed pubs, bars, restaurants, clubs and hotels in the UK rose quarter-on-quarter for the first time in two years, marking a new sign of recovery in the struggling hospitality sector.

There were 99,207 licensed premises in June, up 462 or 0.5% from March, according to an industry survey, according to CGA’s latest Hospitality Market Monitor, compiled by NIQ and AlixPartners.

Although a modest increase, the increase represents the first rebound in the industry since the start of the cost of living crisis and the major cost increase that bankrupted so many operators. It is also only the third quarterly increase since the pandemic began in early 2020.

The hospitality industry has been hit by numerous setbacks since the first Covid lockdown four and a half years ago, which led to the closure of thousands of venues. This was followed by the rise of hybrid working, which kept restaurant and bar footfall in city centres, particularly in London, below pre-Covid levels. Added to this were rail strikes, periods of bad weather and a crippling rise in costs, particularly in energy, labour and food bills.

However, this pressure has eased somewhat over the past year as inflation has steadily declined and the cost-of-living crisis has eased.

However, despite the revival, the sector is still much smaller than it was before the pandemic, with the total number of sites still 13.8% below the pre-COVID level of March 2020.

The casual dining sector has been particularly hard hit over the past four years, with the number of restaurants falling by almost a quarter and the closure rate at just over one restaurant per day.

However, this figure has increased by 1.7% over the past twelve months, with an average of three new locations added per week net in the first six months of 2024.

Karl Chessell, Director of Hospitality and Food EMEA at CGA by NIQ, said: “These figures are a welcome sign of the confidence that business leaders and investors have in the hospitality sector.

“While it is too early to say with any certainty that the hospitality sector’s downward trend in outlets has bottomed out, alongside solid revenue growth in the first half of 2024, these figures suggest the sector’s best prospects in some time. Cost pressures mean thousands of businesses remain unstable and millions of consumers’ discretionary spending remains tight. The hospitality sector may never fully return to its pre-COVID size in terms of outlets – but it is clear that it is now back on a much safer path.”

One sub-sector that has performed particularly well is ‘theme bars’, which include competitive social venues, which have increased by 29% in the last year, while nightclubs have seen a 10% decline.