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Desperate times for bars and restaurants facing “short-term cashflow catastrophe” as footfall plummets 50%

Published:  16 March, 2020

Pressure is being piled on chancellor Rishi Sunak to introduce emergency measures to stem the knock on effect of coronavirus (Covid-19) as footfall to UK businesses fell by almost 50% over the weekend.

Last week’s budget from the newly instated chancellor was a welcome move for many, including the full relief from business rates for businesses with a rateable value below £51,000 and support for pubs with a rateable value up to £100,000.

However, on-trade lobby group UK Hospitality, which represents 700 bars and restaurants across the UK, has said these measures do not go far enough to stem a “unique short-term cashflow catastrophe” that could put insurmountable pressure many of the UK’s most popular bars and restaurants over the next six to eight weeks, and which pose an “existential threat” to the sector as a whole.

“In normal times these measures would have made you a hero of the hospitality sector,” said a letter sent to the chancellor over the weekend and signed by Kate Nicholls, CEO, and others from UK Hospitality.

“Yet, these are not normal times. Events are fast-evolving but the consensus within the sector is that these measures will do very little to benefit the businesses that generate the vast majority of the sector’s economic activity and employ the largest number of people.”

Nicholls added to Harpers: “Some businesses are already reporting severe cashflow problems and some have already had to resort to shutting sites. We desperately need support from the government to fill this black hole in turnover, otherwise closures may become permanent with the results of job losses.”

Among the measures suggested is the suggestion that the government change the law to permit temporary staff redundancies where “demand falls substantially”, while Universal Credit covers wage costs.

This would prevent businesses, which are heavily reliant on cash flow, from going under over the next six to eight weeks.

Today Nicholls added that the sector is facing a “unique short-term cashflow catastrophe as customers are advised to stay away”.

According to UKH, there are 3.2million workers in the British hospitality sector currently and “hundreds of thousands” could be at risk from rapid short-term footfall decline.

Just this weekend, the rapid spread of coronavirus caused footfall at UK pubs, bars and restaurants to fall 44% on Sunday (March 15) compared to what it was last year.

“Business rates must be suspended immediately. Cash in the bank to continue to pay staff is the absolute priority for businesses. We also need extraordinary measures from Government to support our colleagues. There is likely to be a short-term fall in demand. Government should step in and cover wage costs so our staff can continue to look after themselves and so businesses will still be there to provide them with employment when the country gets back on its feet,” Nicholls said.

Things are fast moving as the crisis escalates globally and in Britain. Harpers is working to keep you up to date with information, as well as to share tips and advice from the trade about best to remain on fighting form. 

Up to date advice for staff and employers working in UK hospitality is available online.