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Hospitality industry sizes up ‘Independence Day’ on 4 July

Published:  12 May, 2020

With a liberation day on the horizon for the sleeping hospitality industry, the sector is now asking the big questions about what the end of lockdown will look like.

The word from UK Hospitality is that the government is hoping that as many outlets as possible will re-open on 4 July, the day – at the very earliest – that the UK’s restaurants and bars will be allowed to resume some normal trading.

But what will that trading look like, and how restaurants and bars will weather the transition shored by relief initiatives such as the rent moratorium and the Job Retention Scheme, is now the big question.

After going into “survival mode”, Andrew Bewes, MD at Hallgarten & Novum Wines, said businesses will now be facing difficult decisions about how, and whether, they should reopen.

“We can’t stay in stasis forever, and it’s useful to have a blueprint for reopening. We all know it takes time to plan and reopen and obviously the supply chain challenge for alcohol is having to source stock from around the world.

“But once a vaccine is found, only then will things return to normal. Restaurant floor space of, say, 36m² isn’t a lot of space when customers still need to go to the restroom and be served. And of course, tastings with people spitting into spittoons is a perfect storm. It’s difficult to imagine all of that happening with social distancing.” 

The 36m² mentioned by Bewes is the space required, under the strict social distancing rules of 2m, for a table of up to four people in a restaurant, which would mean a dramatic fall in capacity for most outlets. Add to this the logistics of going to restrooms and the need for staff to actually serve the table makes it a “very tough scenario”.

Speaking of the pressure on on-trade operators and suppliers, Bewes said this morning that there have been many positives to emerge from the situation.

Sales via independents have “rocketed”, and the on-trade has pivoted with “many remarkable examples of restaurants turning their hands to finding a market”, whether that’s delivery or dabbling with the off-trade.

There has also been overwhelming commitment from customers to pay invoices, as well as a lot of goodwill from producers, thus easing the strain across the supply chain.

There remains, however, a lot of pressure out there.

On-trade sales at the hospitality focused Hallgarten have fallen to just 2% of previous turnover, and there is more worry on the horizon as the furlough cut off date of 30 June, and the 'Independence Day' for the on-trade on July 4, are almost back to back.

More information on the furlough scheme is expected some time this week.

For now, many are calling for flexible furlough, or risk “mass redundancies” at the beginning of July.

“It’s kind of crazy that you can’t work at all,” said Bewes. “Whether it’s tapered relief we’ll see, it’s clear we need some flexibility on furlough, because we certainly need support [from our employees] in being able to supply our customers. It will take massive amount of time to get the sector back on its feet. If restaurants are back to 50% of last year’s sales by November/December, I think we’ll be doing incredibly well.”

Then there is the rent forfeiture moratorium.

Rent has become a major sticking point for the on-trade, with more clarity likely to come from government in the coming days.

Bewes praised the efforts of Jonathon Downey of London Union who launched the National Time Out campaign, which has been seeking an extension to the three month holiday from rental agreements, by working with large landlords in the casual dining market. More help is needed however to give both business owners and landlords “space to regroup and rebuild”.

What is clear is that the current situation will have an impact on the sector for a long time to come.

Bewes also said it would be highly unlikely to go ahead with Hallgarten’s big annual tasting event in the same way and scale of previous years. It will all depend on where things are in six months time, and also Christmas, which is likely to be a major crunch-time for the sector.

“By Christmas, the economic reality will be hitting home massively. We’ve all been concentrating on health and survival, but it’s going to take long time for businesses to recover and a lot of that will depend on whether they have good Christmas or not,” he said.

 NB: 2pm GMT update from Andrew Bewes on the extension to the UK government’s furlough scheme

  • The extension of Furlough until the end of October announced today is hugely welcome, as is the commitment to inject some flexibility into the scheme from 1 August to allow furloughed workers to work part time as we all rebuild our businesses.