Hospitality squeeze tightens ahead of Christmasby
As businesses in the hospitality sector lurched from lockdown tier to lockdown tier this month, industry leaders and insiders warned that millions of workers are being ignored as thousands of job losses and closures loom.
The introduction of the tiered restrictions in November forced 21% of the country’s pubs, bars and restaurants to operate as takeaways or stay closed in tier 3. Of the remaining businesses, 77% were not allowed to serve drinks without a “substantial meal”. With even tighter restrictions being mooted for Christmas, hospitality businesses will miss out on the period when many take most of their yearly income.
UK Hospitality, which represents 700 companies, estimated that this drop in December trade will amount to around £7.8bn. The furlough scheme, coronavirus loans and grants and August’s Eat Out to Help Out inititive aren’t going to make up for such a dramatic decrease in trade, industry representatives warn.
The third quarter of 2020 saw activity for pubs and bars rise 35%, while restaurants saw a 47% increase, according to a Deloitte update on the hospitality sector. The government’s own figures indicate that £849m was claimed through Eat Out to Help Out – representing an estimated 160m meals.
Introducing the latest round of restrictions, Boris Johnson offered “wet” pubs that can’t provide food for customers a £1,000 grant. Responding on behalf of the British Beer and Pub Association (BBPA), Emma McClarkin branded the grant as a “meagre amount for pubs to cover nine weeks of costs” that would leave 80% of them at risk of closure.
Ben Steele, CEO of Steele Financial, reflected frustrations on behalf of his clients: “Initially the Government grants (based on business rates) were very handy - a substantial sum enough to help those businesses. But with nothing since, apart from the very small grants available currently of around £600 per two weeks, the hospitality industry is struggling to cover their fixed overheads. Many businesses are facing closure.”
The furlough extension is supporting many hospitality businesses, but they are having to find cash for bills and rent, while tips paid through TRONC arrangements, which sometimes make up half of employee wages, are not covered by the furlough scheme.
UK Hospitality called on the government to come up with an “urgent, targeted” replacement of the Job Retention Bonus”, an extension of rent moratoria beyond 31 December and compensation for businesses losses.
Not everyone agrees, though, One AccountingWEB member suggested the pandemic “has accelerated, rather than caused, some of the difficulties/closures/etc pubs are facing given the difficulties they’ve been facing before coronavirus”.
While backing the Job Retention Scheme and “a furlough style scheme to cover a contribution of rent costs”, Jeffreys Henry LLP partner Bhimal Hira lamented, “The sad part is that many operators are completely relying on government grants and loans to stay afloat. These operators are going to be in an awful lot of trouble on the other side.”
Hira continued: “Others are being pro-active and seeing this as an opportunity to take stock of their business, operations and processes to improve, not just for now but for the future. These operators are going to come out in a much stronger shape, and far sooner.”
It's not difficult to see clubs, pubs and bars attracting more business when new vaccines drive back the virus threat. But this begs the question: will there be any pubs and restaurants to go back to by then?