Hospitality reopenings hobbled by recruitment crisis
After the most difficult 18 months imaginable, most are able to finally reopen.
Even with some restrictions remaining in place, this is the moment many restaurants, bars, nightclubs, takeaways and other hospitality venues have been looking forward to.
But look a little closer and each one has further difficulties of their own to overcome.
According to the latest figures released from the Office for National Statistics, job vacancies passed 1 million for the first time on record and the unemployment rate has dropped to 4.7%.
So why are many hospitality businesses struggling to recruit or retain returning staff?
The furlough scheme is still in operation until the end of September but the proportion of the working population out of work remains higher than before the pandemic.
Industry sources indicate that a gap of approximately 180,000 has grown between available positions and potential recruits available to fill them.
Various reasons have been posited for this gap including former employees finding work in other industries during enforced business closures, better pay, working hours and work/life balance elsewhere, Brexit and the potential uncertainty of businesses continuing to remain open.
Many restaurants and bars were caught out in the “reopen then close” loop before.
Hospitality recruiters are now looking at offering higher pay and benefits as UK wages have risen by nearly 7.4% which is causing more headaches for desperate employers tempted or forced to offer unsustainable packages to entice badly needed staff to join and meet an expected high demand from customers who are either staying in the UK for their holidays or are eager to eat out once again after lockdown.
The worry for some directors and hospitality business owners is that any rise in demand is temporary and they will be in the impossible position of paying higher wages and costs with reduced demand just when furlough and other government support measures and restrictions on creditor actions are withdrawn in just six weeks time,
Nightclubs and other parts of the night time economy have also found reopening a struggle.
The much heralded “freedom day” was disappointing for most as a mix of low consumer confidence, confusing messaging and staffing issues means many are still some way off operating at even 50% capacity.
They are also operating under a forthcoming requirement for vaccine passports which the government still plans to make mandatory for entry into large-scale venues from the end of September.
Will Power, owner and operator of the Lab 11 club in Birmingham said it was “complete madness” to limit nightclub entry only to those who’ve been double jabbed.
He said: “It’s great to be back but we saw a pretty large number of no-shows on our opening weekend.
The venue sold 1,400 tickets for its welcome back night but only 450 attended. A second event saw 850 attendees against 1,500 advance tickets sold and they have had to refund as much as 40% of ticket sales for some events.
While they haven’t had to cancel any events, Power said the venue was in a “vicious cycle.”
“Every time we’ve had to reschedule events due to restrictions it lowers consumer confidence in purchasing advance tickets for future events.”
Michael Kill, chief executive of the Night Time Industries Association (NTIA), said: “These are businesses that have just spent months – some have been waiting for this moment ever since they shut down in March 2020 – preparing to reopen.
“Then, on the much-vaunted day of reopening, they are told, ‘Actually, you are going to have to completely change key features of how you operate within months’. It just isn’t fair and it isn’t right to treat businesses this way.”
Even surviving so far should be a reason to celebrate for a lot of nightclubs.
A study from UKHospitality showed that nearly a third of clubs had closed for good during the past six years alone.
491 clubs from all over the UK, some 29% of the sector, have shut their doors since 2015 going from 1,694 in 2015 to 1,203 in February this year.
The ones that reopen might also be facing a hiring crisis of their own as licensed door and security staff numbers are falling too.
Door Staff require an up-to-date SIA (Security Industry Authority) licence to operate although applications received in the last 12 months are reported to have significantly reduced.
Following the pandemic and subsequent lockdowns approx. 51% of nightclub staff including security personnel have been made redundant; the majority of whom would have been employed under zero-hours terms which would have made them ineligible for furlough under the coronavirus jobs retention scheme.
Many will have found new employment leaving a recruitment gap similar to the one facing the other hospitality sectors.
It’s not just employees in the hospitality sector that have been considering their futures during the previous year and a half.
Many business owners and directors will be looking at their business plans and financial projections and facing some hard choices about what to do in the short and medium term.
The mountain of obstacles facing them might just be insurmountable right now but that doesn’t mean they can’t try again when conditions are more favourable for success.
We offer a free initial consultation to any business owner or director to discuss the most efficient and cost effective ways of closing their business and managing any debts including bounce back loans or other arrears.
Depending on their individual circumstances, they could look to restructure their financial affairs and keep the company going or they could liquidate the old business and ultimately relaunch a new venture within weeks, hopefully without covid restrictions and just in time for a busy Christmas and New Year season.