It couldn’t be worse – could it?
Owners and directors of cafes, bars and bistros might look back after all the hard work of getting everything ready, managing an overworked booking system and maintaining high levels of service and satisfaction and also reach the same conclusion – although possibly after they have had a chance to rest first!
And who could wish them anything but the busiest of months after the most trying times the industry has been through within living memory.
Unfortunately recent events are indicating that the sector could be facing an even tougher time this year.
The background noise is already increasing with the number of restaurants in the UK going into insolvency – including administration and liquidation – rising 31% in the previous quarter of the year from 226 to 296.
This coincides with both the end of the coronavirus job retention scheme or furlough at the end of September and the slight relaxation of creditor actions including bringing winding up petitions.
It’s also coinciding with a cash flow crisis for the industry as they compete with each other for eligible recruits driving up wages as experienced and skilled staff become scarcer and more expensive as a result.
They had to decide whether to bring back existing staff from furlough or instigate redundancies. They also had to judge if they had to restock inventories, clean and refurbish premises that might have been closed for months on end and make them covid safe to reassure nervous customers.
Restaurants and bars have to decide if they want to take up these additional costs themselves or increase their prices just when customers are needed the most.
They will also have to start repaying bounce back loans if they took any out as they have now come due.
Unlike last year there were no advantages from an “eat out to help scheme” which gave the sector an £849 million boost in August 2020.
All of this has happened before the emergence and rapid spreading of the omicron variant of the coronavirus which has necessitated renewed government health advice including social distancing and mandatory mask wearing indoors.
The effects of the new variant are already being felt by hospitality businesses even while the number of actual cases in the UK is still relatively low.
Data released by OpenTable and the Office of National Statistics this week has found that the number of people dining out across the UK has fallen to its lowest level since May – when indoor dining was permitted again.
In the past week alone the seven-day average of UK seated diners fell by six percentage points.
Kate Nicholls, chief executive of trade body UKHospitality said that a second Christmas lockdown would be catastrophic for a sector still rebuilding from the previous 18 months and one that is heavily reliant on the festive period.
She reported that members are already seeing an increased number of cancellations, which would lead to a serious financial impact on hospitality businesses.
She said: “There will undoubtedly be an impact as consumers digest the news and take steps to protect themselves, while travel restrictions may mean some bookings are being cancelled.
“Fears about the Omicron variant would have a chilling effect on confidence just as we were about to head into our busiest trading period.
“Any drop in revenue pushes businesses back to loss making as grants and other support have fallen away. Last year we had grants, reduced VAT and full furlough but none are in place now. Businesses simply won’t be able to cope as substantial restrictions should mean substantial support.”
Representatives of the nightclub industry are even more downbeat about their immediate prospects.
Peter Marks, chief executive of Rekom UK which has 46 UK venues formed from the administration of Deltic earlier in the year points out that the nightclubs had already been closed for longer than any other hospitality segment and had received less support too.
“If we lose Christmas and new year it would cost millions and mean you would not have the cash to see you through the already sparse trade of January and February.
“Even restrictions such as having to ask for vaccine status on the door could have major effects as slow queues in freezing conditions are not conducive to great trade.”
Nothing helps business than businesses helping themselves
Chris Horner, insolvency director with BusinessRescueExpert, is worried that thanks to longer term changes in customer behaviour, cancellations caused by short term events such as Omicron could become a self fulfilling prophecy.
He said: “Even if the Omicron variant is less of a threat than we fear, and we all hope this is the case, it will still negatively impact on the hospitality sector that needs a good festive trading period.
“Unfortunately one of the problems they and every business face is that every new wave of the virus changes and embeds the way customers and the wider economy functions.
If Omicron does take hold and is followed by other variants then it’s logical to assume that there will be more working from home, renewed restrictions and a further shift from face to face interactions to online.
Which means customers will be even more likely to stay at home regardless of the actual threat – it’s a vicious circle.
“Sadly for restaurants and bars, they are caught right in the middle of it and unless they can scramble and come up with some alternative offerings such as take outs or delivery then, impossible as it might seem, they may have an even worse Christmas than last year”.
That’s the sobering reality facing thousands of pubs, cafes, bars and other businesses that need a good Christmas trading period just to help them return to pre-Covid levels of income in many cases.
So this could be the perfect time to get in touch with us and book a free initial consultation with one of our expert advisors.
Once they get a fuller picture of the situation your business is facing and what the immediate threats are they can get to work on finding some effective solutions.
You might be surprised at how many options you could have but only if you act quickly. If you wait and see what happens over the course of Christmas then it might end up being too late which is the end of the year that nobody wants.