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takeaway restaurant

When the Prime Minister announced that the full lifting of lockdown would be delayed a further four weeks until July 21st, the hopes of hundreds of thousands of restaurants, pubs, nightclubs, takeaways, bistros and many more firms are, once again, hanging by a thread.

The Night Time Industries Association (NTIA) conducted a flash survey of 300 of their member businesses this week in anticipation of disappointing news and found that one in four said that they would not last more than a month without further assistance if restrictions were extended. 

Half of respondents said they would have to close permanently if the restrictions went on for longer than that. 54% had already spent over £15,000 in preparation for reopening on June 21st while a small but significant minority, 17.8% had spent over £40,000.

One in five estimate they’ll lose over £40,000 in revenue every week they are restricted or closed while as many as 58% will lose over £10,000 and over a third - 33% - said they will lose 30% of their workforce with a delay. 

NTIA Chief Executive Michael Kill said: “Distressed industries cannot continue to be held in limbo, as businesses are left to fall, any decision to delay without clarity on when they can open will leave us no other option but to challenge the Government, standing alongside many other industries who have been locked down or restricted from opening for an extreme length of time, through no fault of their own, and at their own cost.”

NTIA is also campaigning for the government to extend the temporary 5% reduced VAT rate on hospitality, which is due to rise to 12.5% at the end of September. 

“These businesses are overburdened with debt, so any decision to delay will make them heavily reliant on the Government to extend financial support and relief, including additional restriction grants, exclusion from furlough contributions, extension of loan repayment holidays for CBILS and bounce back loans as well as business rates and VAT relief for the next 12 months, not forgetting the £2.6 billion in commercial rent debt left unresolved” said Michael Kill. 


Bounce back loans - how much was borrowed where you live?


Pubs and bars are also in the firing line with the British Beer and Pub Association (BBPA) estimating that the delay will cost the industry £400 million collectively.  

BBPA Chief Executive Emma McClarkin said: “Every week the current restrictions stay and uncertainty continues, the likelihood of pubs being lost forever increases. 

“Our pubs require as a minimum an immediate three-month extension to the business rates holiday, the ability to defer loan payments due now and a further extension of VAT support. Grants for businesses particularly affected, such as those pubs who cannot still reopen because of the current restrictions, must now also be put in place. 

The ongoing restrictions combine with the following negative factors to form the following timeline of trouble:-

When you factor in the aggressive approach lenders are beginning to take to recover unpaid bounce back loan and CBILS debts, some with personal guarantees attached for directors, then it looks like it could be a cruel summer for these business owners. 

Dr Roger Barker, Director of Policy with the Institute of Directors likened the evolving situation as a “cliff edge” stating that any public health measures must be matched with economic ones. 

He said: “Clearly this is a blow for many businesses but particularly those in the retail and hospitality sectors. 

“As government support for business ends or begins to taper off, it’s vital that other support is pushed out commensurately with the lockdown extension.”

His fears are shared by other groups including the Federation of Small Businesses (FSB), UKHospitality and the British Chambers of Commerce. 

Craig Beaumont of the FSB said: “Businesses in the night time economy have had five quarters of no revenue whatsoever and for everyone else, the chopping and changing makes it impossible to plan and mitigate against the difficulties of restricted trade.”

He also added that the ability to defer VAT is also due to end in June and that “a third of those who deferred their VAT have yet to agree to a repayment plan.”

The British Chambers of Commerce are calling on the government to provide further cash grants at least equivalent to levels provided during the first lockdown and to delay the tapering of furlough payments.

UKHospitality, who estimate their members would collectively lose £3 billion in sales from a one-month delay are lobbying for business rates payments to be postponed until October and for hospitality businesses to receive a rent and debt moratorium until a longer term solution to Covid arrears is found.

The Scottish government has allocated a combined £25 million in the funds for cultural organisations, venues and performing arts organisations to apply to help “prevent insolvency or significant job losses due to the ongoing impact of the Covid-19 pandemic”. 

But any business looking for additional support from the Chancellor will be disappointed as the Treasury confirmed that no additional support will be forthcoming to cover the next four weeks. 

A spokesperson for the Treasury said: “The furlough scheme is in place until September - we deliberately went long with our support to provide certainty to people and businesses over the summer.

“The number of people on the furlough scheme has already fallen to the lowest level this year, with more than 1 million coming off the scheme in March and April.”

Chris Horner, insolvency director with Business Rescue Expert, thinks that while the news is disappointing for thousands of businesses, now the decision is made they can begin to act with more certainty to secure their futures. 

He said: “Even businesses that could fully reopen on July 19th, might not be in a viable position to resume trading with another four weeks of debts building up on top of the previous 16 month’s worth. 

“Businesses that gambled on a June 19th reopening will be counting the cost of purchasing supplies and bringing staff back in expectation but now have an additional four weeks to wait. 

“The confirmation that winding up petitions and the ban on commercial evictions will both resume on July 1st will also be a blow to many businesses as now action can be taken by creditors to begin to recover outstanding debts. 

“Directors and business owners should use this short time before the end of the month to get some professional advice so they can put into place business rescue strategies ahead of these changes taking effect. 

Insolvency moratoriums, administrations and company voluntary arrangements all allow a business to begin the restructuring process with protection from creditors seeking repayment - this could be a crucial first step to saving an otherwise viable business.

“Alternatively, liquidation could be the best solution if debt, including bounce back loans or CBILS loans, is just too high a barrier for the firm to overcome.

“Whatever is the best solution for them - they need to act on it and fast.” 


For businesses that need to reopen but can’t - time is running out. 

The announcements confirming the extension of the lockdown restrictions coupled with the relaxation of some of the legal protections for businesses means the next two weeks are when critical decisions must be taken for companies in financial distress.

Some might have a pathway back to profitability after a temporary period of restructuring, others might have no option but to close down but they can do it efficiently and solve their outstanding debt issues before being able to reform and begin trading freely as a new company once restrictions allow them to. 

The only way they can do this is if they act quickly and get in touch with us to arrange a free initial consultation with an expert advisor. 

They will accurately summarise the options available to them, what they need to do to take advantage and how they can begin to solve their outstanding issues in time to return in Autumn leaner and stronger.

The alternative is the bleak scenarios forecast for businesses since the lockdowns began coming true - and soon.

bounce back loan borrowing
When we published the first part of our series looking at the UK’s bounce back loan scheme earlier this month, it was to get a better view of the overall borrowing levels.

We found several official projections indicating that billions of pounds lent under the scheme would ultimately not be repaid, with the losses equal to the cost of building between six and 23 Wembley Stadiums from new. 

In the second part, we broke down the borrowing by industrial sector - comparing how much retail, hospitality, construction and all the other sectors had borrowed under the bounce back loan scheme.

For this final article in the series - we’re looking on a more local basis. 

Which nations and regions saw the most demand for bounce back loans? Which areas had the most borrowing per capita and which parliamentary constituencies had the highest bounce back loan borrowing rates?

Our methodology

The data sources used to compile the various best and worst-case scenarios used in the projections are taken from the Office of Budget Responsibility’s Fiscal Sustainability Report; the latest  BEIS annual report and the National Audit Office (NAO)’s regularly updated COVID-19 cost tracker

The UK regional and parliamentary constituency lending breakdowns were compiled and published by the British Business Bank

The number of businesses in each region was taken from the Department of Business, Energy and Industrial Strategy’s business population estimates. 

Using this public data as our benchmark, we projected three different scenarios for bounce back loan scheme defaults as outlined within them.

The scenarios set out a best case (with a 15% bounce back loan default rate); a median case (40% default rate) and a worst case scenario (60% default rate).

Finally, the regional classifications used are the official Classification Of Workplace Zones (COWZ) administered by the Office of National Statistics


Can a business consider liquidation if it has outstanding bounce back loans?


North East businesses most likely to borrow bounce back loans - but obtain the least money from them

regional bounce back loans

Source: https://www.british-business-bank.co.uk/coronavirus-loan-schemes-continue-to-support-businesses-evenly-across-the-uk-new-analysis-shows/ 

When talking about millions and billions of pounds, It can be easy to lose sight of what these figures mean for individual businesses. 

Taking out a bounce back loan might have been the difference between closing down and remaining open at the time for many of the small and medium-sized businesses that are ultimately the bedrock of the UK economy. 

We’ve collated the total amount each devolved nation and English region has collectively borrowed under the bounce back loan scheme as well as the overall number of bounce back loans taken out by businesses based in that area. 

We also list the average amount borrowed by these companies individually, the ratio of businesses to loans in that area and the projections for default rates, based on our analysis:

While bounce back loans were supplied by banks and other lending institutions, because the funding was guaranteed, the amount lent was limited to between a minimum of £2,000 to a maximum of whichever was lower - £50,000 or 25% of the applicant’s 2019 turnover.

As might be expected then, the areas with both the highest number of bounce back loans taken out and the highest total amount of borrowing were London, closely followed by the South East of England. 

But if we look at the ratio of local borrowing - which is the total number of BBLS loans approved for that location divided by the total number of businesses operating in an area - then the picture changes.

For instance, 27.5% of businesses in the North East, over one in four, applied for finance under the bounce back loan scheme, which was the highest demand in the country. But the average amount actually loaned per applicant was £26,751 - the lowest figure in the UK.

That’s nearly £7,000 less than a comparable London-based business that borrowed an average BBLS amount of £33,480, the highest average amount in the country.     

27% of North West businesses applied for support funding, which were given £29,568 on average (nearly £3,000 more than their North East counterparts) while Welsh companies were the next most eager. 26.4% of businesses based in Wales took out bounce back loan borrowing to an average sum of £27,226 each.

Businesses in South West England had the lowest overall borrowing ratio with just over one in five (20.6%) applying to the scheme and taking £28,432 in bounce back loan lending support.

Businesses on the other side of the Irish Sea from the UK mainland in Northern Ireland saw the lowest overall number of bounce back loans taken out with just over 38,000 approved - nearly eight times less than the amount applied for by London based companies. 

Northern Ireland also saw the least amount of total borrowing too with £1.1 billion lent, although even this total could be subject to defaults in the range of £165 to £660 million depending on the ultimate level of defaults occurring.


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


Every MP has constituents who’ve taken out bounce back loans

bounce back loan not London

We’ve taken a deeper dive into the available data and analysed bounce back loan scheme lending according to the makeup of each of the UK’s 650 parliamentary constituencies. 

Regional and national data gives us a good understanding but we can see how the story looks even closer to the ground with this additional information.

The table below shows the top five constituencies for the total number of bounce back loans taken out by companies physically located in the area.

It also shows the total amount they borrowed, the average amount borrowed by businesses located there, the projected default rates and who the sitting MP is. 

This is who businesses might be contacting in future for help if their fortunes take a turn for the worse in the intervening weeks and months. 

Once again, London based companies dominate these results


 

Bounce back loan borrowing by parliamentary constituency

Source - https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

The City of London and Westminster constituency includes some of the most prominent and pricy real estate in the world including Pimlico, Hyde Park and most of Covent Garden. 

Businesses here dominate both the number of bounce back loans taken out (16,122) and the highest aggregate amount borrowed under BBLS at well over half a billion pounds (£633,881,829).

Some of the other areas in the top five might be more surprising. 

The neighbouring constituency to Westminster is Holborn and St Pancras, represented by Labour leader Sir Keir Starmer. This has the second-highest number of businesses taking out bounce back loans, borrowing a total of over £354 million, of which at least £53 million could be lost if just 15% of these borrowers default in the coming months. 

Hackney South and Shoreditch, most commonly associated with technology startups and the hipster coffee hangouts, were the next most eager to borrow with over 9,000 bounce back loans obtained, which provided over £300 million in support collectively for the app builders and small artisan brewers in this quarter of the city. 

The top five constituencies outside of London represent some of the other city centre areas of Birmingham, Manchester, Glasgow and Liverpool, along with a more surprising entry - Slough. 

Most famous as a commuter town at the southern edge of the Thames Valley and the fictional headquarters of Wernham Hogg paper as seen in the titles of The Office, Slough is also one of the largest mixed commercial estates in Europe combining a number of large manufacturers and corporate headquarters which will attract other companies wanting to be located closer.


Click here to use our exclusive interactive tool to see how businesses in your local parliamentary constituency have used recovery loans


Bounce back loan borrowing by parliamentary constituency (excluding London)

Source - https://www.british-business-bank.co.uk/wp-content/uploads/2021/01/CBILS-BBLS-Offered-Constituency-Region-Sector-11th-January-20215.pdf 

bounce back loan by constituency

Chris Horner, Insolvency Director with Business Rescue Expert, said: “The data gives a fascinating insight into the distribution of bounce back loan borrowing across the whole of the country.

“It’s especially interesting when you look at which areas have seen the most businesses borrowing and the amounts they have loaned.

“Based on the insolvency cases of the small businesses we’ve worked with this year, over 41% of them entered liquidation with an outstanding bounce back loan balance of £37,350 - higher than the individual borrowing averages of any location. 

“No matter where a business is based, the important thing for them to remember is that they do have options if they’ve taken out a bounce back loan and think they’ll have trouble repaying it.

By getting professional insolvency advice quickly, possibly before any potential problems appear, they will be in the best position to react and respond. 

“After nearly two years of consistent decline, company insolvency figures are starting to rise once more and as support measures are removed later in the year, we’d only expect this trend to gather pace. 

“It won’t happen at a uniform rate across the country, it will affect some areas more quickly and deeply than others.

“That’s why finding out more administration procedures and liquidation options now before circumstances force them to, could be the best call any business could make in 2021.”

takeaway restaurant
 
Social distancing rules will still apply and it will be limited to table service only but for businesses with no outdoor space or that have been relying on delivery orders alone, it’s set to be a red letter day for a lot of the hospitality industry.
 
Hotels, hostels and B&Bs are also able to open to the public rather than offering self-contained accommodation. 
 
The lifting of restrictions means that a maximum of six people from two households can meet in a group indoors with further restrictions set to be lifted in June. 
 
Kate Nicholls, chief executive of UKHospitality, said: “There is a huge sense of relief within the sector, in particular for the six in 10 venues that weren’t able to reopen due to a lack of outdoor space.
 
“However, with significant restrictions still in place, this is a psychological opening rather than an economic one, with the profitability of the sector still a huge issue.
 
“Hospitality, as it emerges from restrictions, is still in a fragile state and continued government support will be critical to ensuring the sector is rejuvenated and plays a full role in the wider economic recovery.”
 


A Business Viability Review is a far better option than a guess


 
While a number of takeaways, be they fish and chip shops, kebab and pizza makers or make the best jerk chicken outside of the USA and the caribbean, have been operating during lockdown, many haven’t been able to reopen. 
 
Some takeaways have been able to provide a click and collect, drive through or delivery services and won’t see a big change next week as they will be able to continue offering these. 
 
Food providers with an indoor dining facility will be able to reopen this for the first time in months but will have to follow some careful steps to make sure they remain safe and Covid-compliant when they do. 
 
Others might be reopening for the first time since the year of lockdowns began in March 2020, so will have a lot more to do and think about. 
 
Including whether it’s worth reopening at all. 
 


 
Doing the reopening shuffle
 
A brief itinerary for reopening a takeaway or restaurant will look something like this:-
 

 
None of this takes into the financial position of the business itself and how this has been impacted in the previous 12 months.
 
If the restaurant has been able to offer a take away or home delivery service then it will have been able to bring some money into the business as well as possibly taking advantage of government backed support measures such as the bounce back loan scheme or the coronavirus job retention scheme or furlough. 
 
For those that weren’t then things could be a lot more serious and bleaker. 
 
Debts will have continued to accrue, bills would have been paid all the while there’s no income arriving to offset it. Even if they accessed support measures, bounce back loan repayments are beginning to come due unless these have been deferred by six months.
 
The unfortunate but inevitable truth might be that some takeaways just can’t afford to reopen and instead should look at closing their business down properly so they can begin again.
 
This also applies to shawarmis, pizzerias and chippy’s that might still be trading but realistically have no way of clearing their debt and at best are just keeping their heads above water. 
 
Some might just need some breathing space to work out if the business could be viable again and produce a plan to achieve this
 
For others it would involve liquidation but depending on individual circumstances this could be easier, quicker and cheaper than they thought.
 
Before any decision is made the best thing to do is to get in touch with us. 
 
We offer a free, initial consultation where we can get the full breakdown of the circumstances surrounding the business.
 
Then we can tell you what you can do, right now, that will have an immediate impact and what choices can follow from that. 
 
Only then can you look forward to the future with some certainty and be able to plan far ahead of what’s for tea tonight. 

2020 Year of Lockdowns

It’s nearly been 365 days since the UK went into its first national lockdown as it faced its first major public pandemic in over 100 years.

From March 23rd 2020, companies in every sector closed by order and we all had to work, educate and shop from home to contain the spread of Covid-19.

Nothing has really been the same since - especially for businesses.   

We’ve spent the past 12 months helping firms that have fallen into financial difficulties to restructure and pay off their debts under new arrangements or allow them to efficiently close so their owners can move onto new challenges when the lockdown is gradually lifted completely. 

Alongside our business rescue and recovery work, we’ve also spent a year observing, collating and analysing data from various sources to compile a comprehensive and wide-ranging report of what happened to our country and its companies.

The “Year of Lockdowns” story shows what effect restrictions have had on the various industrial sectors, geographic regions and on the individual businesses and employees that make them up.  

This is the story of 2020 - a "Year of Lockdowns”. 


COVID-19 caused more economic damage to the UK than Napoleon, Hitler and The Kaiser 

Napoleon
In an already historic year, we should start with the news about history being made.  

The Office of National Statistics reported that 2020 saw UK official GDP shrink by 9.9% in the previous 12 months - the largest annual fall in over 300 years since the Great Frost of 1709. 

The collapse is even greater than any previously recorded including during the Napoleonic wars; World Wars One and Two; the great depression of the 1920s and the great recession of the late 2000s.  

The economy regained some ground in the second half of the year as some lockdowns were eased and the “Eat Out to Help Out” scheme attracted more people to support their local pubs and restaurants.

Despite these positive factors, the economy was still 6.3% smaller than it was in February, the last full trading month before the first lockdown was implemented. 

This was the biggest fall among all the G7 nations with USA GDP down 3.5%; Germany down 5% and Japan down 5.6% by comparison.


One in three UK workers were furloughed as unemployment rose to a six year high

Furloughed

Since the beginning of the lockdown and the Coronavirus Job Retention Scheme (CJRS) being rolled out, 11.2 million workers have been furloughed in the previous 12 months. 

With 32.6 million people employed in the UK, this means that one in three workers was in receipt of furlough pay at some point in 2020. 

The UK unemployment rate also rose by 1.1% to 5.1% by the end of 2020 with 1,744,000 additional people looking for work. This is the highest recorded level since 2015. 

Chancellor Rishi Sunak extended the furlough scheme until the end of September 2021 in the recent budget with employers expected to contribute 10% of furloughed employees wages from July, rising to 20% for August and September.  

The Office for Budget Responsibility (OBR) estimates that £73.6 billion had already been spent on employment support schemes such as CJRS and others by November 2020 so this will add to this already striking figure. 

While economic and employment activity are expected to rise, greatly, in the next six months as lockdown is gradually lifted, the end of the furlough and other schemes will still create a moment of hazard for businesses and their employees if they can’t find a way to begin to trade profitably by then. 


Construction bore the brunt of insolvencies by industrial sector

Scaffolding

The Insolvency Service reported that since March 2020 there were 8,205 company insolvencies up to and including the end of January 2021. 

Broken down by individual industrial sector they were :

The halting of various building projects, both large and small scale, have badly damaged the construction industry over the previous 12 months. 

This might seem surprising given the historic damage experienced by the hospitality and retail industries but these have been well publicised and several were more visible to the public as an empty shop unit will be more noticeable than an empty building site.

There was also £453.4 million in redundancy pay and other support benefits paid out in 2020 which was the highest amount in ten years and an increase of 31% from 2019.

Another government agency, the Redundancy Payments Service, will make financial payments to employees whose former employers have gone into insolvency and cannot pay any legally due claims. 


Yorkshire and Humber businesses were most likely to become insolvent in 2020

Whitby
With the help of the Office of National Statistics and The Insolvency Service, we looked deeper into the regional insolvency statistics for 2020 and produced a comparative figure - the Corporate Insolvency Ratio - showing the likelihood of insolvency based on the numbers of active businesses in a region/nation and the number of business insolvencies recorded there. 

The table shows the number of businesses registered in each UK nation and English region, the total number of business insolvencies and the Corporate Insolvency Ratio for each.

[ninja_tables id="12447"]

Because of certain statistical caveats, the figures are an approximation based on available data rather than a complete and official record. 

On this matrix, the figures show that a business in the Yorkshire and Humber region of England was statistically most likely to undergo an insolvency event than in any other region (1 in 115) while a company based in Northern Ireland would be least likely (1 in 506). 

Additionally, businesses in the North East, North West and West Midlands of England along with London were at greater risk compared to the national average (1 in 207) while Scotland, Wales and every other English region was less likely than the average. 


Why corporate insolvencies went down in 2020

high street

Given all the news and information we already know about the year of lockdowns, it might be surprising to learn that the total number of corporate insolvencies actually fell in 2020. 

They went down to their lowest recorded levels since 2007. 

So what’s going on? The main reasons can be surmised as follows:-

With the exception of the insolvency moratorium, all of these measures are temporary and will be withdrawn by Autumn this year. 

Ironically, 2021 could have many more corporate insolvencies than 2020 had. 

Chris Horner, Insolvency Director with Business Rescue Expert said: “Ominously, even with restrictions being lifted and economic activity rising, 2021 will be a worse year for insolvencies in several industries than the year of lockdowns was, 

“Government support in the form of backed loans, furloughs and the temporary ban on winding-up petitions and other creditors actions are all expected to end sometime in 2021. 

“Bounce Back Loan repayments and others will begin to come due, businesses will have to decide if they can re employ or redeploy their furloughed workers and creditors that have been under severe financial pressure themselves will finally have the ability to look for repayments that might be critical to their own survival.”


Not on the High Street - Anymore

Topshop

The previous 12 months has seen the demise of some of the most storied companies in Britain. 

Debenhams was formally wound-up in the High Court with BooHoo buying its online brands and trademarks to relaunch as an online-only retailer. 

The Topshop, Topman and Miss Selfridge brands of the Arcadia group were bought by ASOS with BooHoo returning to purchase the remaining Wallis, Burton and Dorothy Perkins brands. 

No physical properties were included in any of the deals. 

BrightHouse, the UK’s largest rent-to-own retailer went into administration in April along with Laura Ashley while fitness retailer DW Sports announced it would not reopen in August. 

Regional UK airline FlyBe went into administration in March where it remains until a buyer is found. With other carriers unable to operate a regular, reliable UK-wide service yet, 2021 is another year that might have historical consequences.

Research from the Local Data Company shows how devastating the year of lockdowns was for the retail industry. 

They estimated that 17,532 chain store outlets located in high streets, retail parks and shopping centres closed last year - an average of 48 per day. This is compared to an overall total of 7,655 openings to replace them, or 21 per day.   

The net loss of nearly 3,500 locations was a third higher than in 2019. 

“The rise of online shopping and home delivery which provided a shot in the arm for the hospitality industry, might be a more mixed blessing for retail” said Chris Horner, Business Rescue Expert’s Insolvency Director. 

“We won’t know for some time how many new habits and shopping methods we adopted in 2020 will stick in 2021 and become permanent or how many will revert to the previous physical model. 

“Some companies might bet big one way or another and hope to reap the benefits of being a successful early mover. Others might hedge their bets and hold back investing, redeployment and retraining which could prove more sensible in the medium and long term but would impact negatively in the immediate future in terms of investment and activity.” 


We still don’t know how 2021 will unfold as many businesses are still unable to open their doors and trade freely and some won’t until we get into the Summer at the earliest. 

For others, even when they do return, they’ll find that customer behaviour, retail trends and other changes will mean that they will have to recalibrate their own offerings if they want to make up lost ground. 

One thing we can guarantee this year, maybe the only thing that can be, is that Business Rescue Expert will continue to be here to help advise and guide any business that is having financial issues or doesn’t know what their next professional step should be. 

We offer free virtual consultations for any company that needs to clarify its position and understand what options are open to it. 

The benefit of acting first is that you usually find you have more choices and strategies available than whoever acts second. 

Get in touch and find out what they are for your business - today.

Nightclub
Britain’s nightclubs, bars and casinos are due to reopen from June 21st at the earliest with most being closed for nearly 12 months since the start of the first national lockdown in March 2020. 
 
But the Night Time Industries Association (NITA) say that even if this happens, the sector is still facing an existential threat to its very existence. 
 
A recent survey of more than 100 of their members reported that 81% say they won’t survive beyond the end of March without further support from the Government.   
 
Additionally, 86% of respondents have had to make redundancies this year with 65% making more than half of their entire workforce redundant before the end of 2020. This is before taking into account that 43% of respondents had not received any grant support from the government during this period.  
 
While lots of industries are pleading their case to the Chancellor for special treatment and support, the night time industry feels its case is first among equals for consideration. 
 
NITA Chief Executive Michael Kill outlined the various threats his members are facing on multiple fronts. 
 
He said: “Throughout this pandemic and the restrictive measures levied against the sector, it’s clear that our businesses are being systematically eradicated from society.
 
“They continue to be excluded from the narrative of press announcements and planning, and though misconceptions and a misguided understanding of the sector, we’ve been given little or no opportunity to re-engage even with very clear ability to open our spaces safely.”
 
Kill outlined how current proposed changes in planning reform under permitted development rights was another huge threat to the sector as it had the potential to allow for the demolition and rebuilding of vacant and redundant light industrial buildings used as clubs and venues as housing instead. 
 
He said: “Given that over 88% of nightclub businesses are over two quarters of rent in arrears, we’re poised for a windfall of landlords at the end of March when the forfeiture moratoria comes to an end. Reclaiming their property and utilising this planning mechanism to convert many of our much loved cultural spaces and social environments into housing. 
 
“Getting help from banks and financial services, whether through insurance or lending within the sector, has been near impossible, confidence is at new lows coupled with the ineligibility to access much financial provision outside of furlough. 
 
“The extensive period of closure without recognition is perceived by the sector as negligence.”
 
A recent All-Party Parliamentary Group report into the Night Time Economy found that it contributed as much as £66 billion to the UK economy but also acknowledged the unique logistical challenges facing an industry that thrives on close human contact as part of the experience. 
 
While the Group suggested that latest flow testing along with vaccinations could be a key component in the reopening, Luke Laws, operations director of Fabric nightclub in London said that the reality of this would see a socially-distanced queue stretch 1.7 miles from their front door if 2000 people, their capacity, wanted to gain entry. 
 
This also doesn’t take into account if negative Covid-19 tests were required for entry - where the clubbers would wait for results and who would be responsible for administering and paying for the tests. 
 
Mr Laws said that they had looked at scenarios such as renting and closing off nearby roads to allow for this but this would be untenable as it would involve at least 240 additional staff just to administer. 
 
Owners also cite the issue of dancing and compulsory mask wearing as other negative factors affecting their reopening. For instance, having a socially distanced dancefloor would see customer numbers fixed at below break-even points for many operators. 
 
The industry as a whole will be hoping for targeted specific support coming from the Budget if the majority of clubs and bars are to survive in the long run but with lots of other industries also seeking support - they might have to remain behind the velvet rope for longer. 
 
Nobody likes calling last orders but it’s an essential task for any operator. 
 
This also applies if they take a long, hard look at their own business circumstances and likelihood of recovery. 
 
While there may be some support forthcoming in the Budget, it might be too little, too late if isolated or insufficient. 
 
The year of lockdown might also have given owners different ideas and impetus about what they want to do going ahead. 
 
They might have discovered a new direction they want to pursue or a new venture they’d like to try but can’t because they think their previous one will hold them back and weigh them down. 
 
Have a chat with us first. 
 
A free initial consultation with one of our expert advisors will allow us to explore options with you including various ways on how to close your business with a minimum of stress and fuss. 
 
There’s always a weekend every week so if you feel the party’s winding down, let us help you start your next one.

That London
The sweeping rules that came into force yesterday and will last for a minimum until December 30th will come as a shock to customers and businesses that were starting to look forward to a brighter Christmas trading period. 
 
The main rules affecting hospitality and entertainment sectors include:-
 

 
As well as the West End, various local theatres that were preparing for their annual pantomimes will now be closed. 
 
Many professional sports teams who were looking forward to welcoming some fans in for the busy Christmas period will now be playing to empty stands once again. Even the famously rambunctious PDC World Darts Championships at Alexandra Palace will only have one night of spectators before the players throw in a cavernous empty hall for the duration of the tournament unless restrictions are lifted at the first review date. 
 
UKHospitality chief executive Kate Nicholls said that the move effectively “cancels Christmas” for their members. 
 
She said: “Putting hospitality businesses back into lockdown, which is effectively what Tier 3 amounts to, is not going to tackle increasing infection rates. There’s still no hard evidence that hospitality venues are a significant contributor for the spike in infections. Cases were higher at the end of the last lockdown - during which hospitality was shut down - than at the start. 
 
“The Government is cracking down on hospitality for an increase in the infection rates that occurred during a period when hospitality was forcibly closed. It makes no sense.
 
“So many pubs, restaurants, bars, cafes and hotels, having invested so much to make their venues safe, are only just clinging on by the skin of their teeth, but will be forced to take another huge hit. 
 
“The burden of a region being moved into Tier 3 falls almost exclusively on hospitality businesses. It’s an illogical tactic that fails to tackle Covid effectively but does push businesses closer towards failure.”
 
She was joined by Eddie Curzon from the Confederation of British Industry (CBI) who said: “Retail and hospitality businesses will have been counting on a festive filip to help mitigate months of hardship, and further restrictions now will come as a devastating blow. Thousands of jobs and livelihoods could be at risk.” 
 
Emma McClarkin, chief executive of The British Beer & Pub Association said: “This could completely destroy many pubs in London, Herts and Essex who have taken bookings for the lead up to Christmas and New Year’s Eve if the tiers don’t change before then.
 
“In London alone, it will see the final 1,250 pubs who remained open in Tier 2, supporting 8,000 livelihoods close. The survival of the great British pub as we know it hangs in the balance.”
 
Sadly she might be right. 
 
Since the first lockdowns were rolled out in March, 2020 has been a near-extinction level event for the hospitality and restaurant industry. 
 
Many profitable going concerns, through no fault of their own, will be forced into insolvency especially if there is no respite this or early next year. 
 
But this doesn’t have to mean the end for them. 
 
There is currently a small window of opportunity that pubs, restaurants and cafes could take advantage of to protect their businesses. 
 
An Insolvency Moratorium allows a company to have an automatic 20 day freeze on all creditor recovery actions which can also be extended for another 20 days or longer if necessary. 
 
The moratorium stops:-

 
The valuable time the Insolvency Moratorium buys allows the business to work with an insolvency professional to work out how they can restructure their company to survive the current storm and reemerge in a stronger form to grow again once vaccines are rolling out and tiers are being lifted. 
 
Get in touch with us today to see how you and your business can benefit from an insolvency moratorium or other business rescue processes like administration or a CVA.  
 
Nobody knows how the next few weeks will play out but it’s going to be expensive even for well-financed hospitality businesses. 
 
Even if you have the resources and the will to navigate these incredible times, there’s help available to make it easier.
 
Then you can hopefully begin to look forward to a happier New Year.

Xmas covid
Hospitality
 
Just when the hospitality sector didn’t think things could get any worse for most of them - it does. 
 
Pubs, cafes and restaurants in tier 3 have to close unless they offer a takeaway or delivery only food service option. 
 
Previously hospitality venues could stay open in tier 3 areas if they also operated as a restaurant but this requirement has been placed upon tier 2 areas. 
 
Even then they are limited to takeaway, delivery or table service only and can only serve alcohol if it accompanies a substantial meal. 
 
All hotels and accommodation destinations in tier 3 have to close regardless of any food offerings. 
 
UKHospitality said this is the biggest threat facing the industry and its revenues. They said: “This is effectively a lockdown for businesses in tier 3 and further purgatory for those facing even tighter restrictions in tier 2. At best it’s a restrictive straitjacket and at worst a lockdown in all but name.”
 
Approximately 98% of their members will be in tiers 2 and 3.
 
“Rather than saving Christmas, these damaging measures will ruin it for hospitality businesses and their customers.”
 
Sacha Lord, Night Time economy advisor for Greater Manchester said: “I’ve heard reports this morning that 94% of pubs in tier 3 areas will go under by Spring, and while this may seem excessive to some, it is no exaggeration.
 
“These places are the lifeblood of communities...to kill these vital social spaces with these hardening measures will be a devastating blow to the very fabric of British culture.
 
“It’s clear that the ever increasing debt from rents, rates and bills will be too much for the majority, especially the independent operators which cannot lean on parent companies. 
 
“Operators across the UK have spent several millions on making their venues covid-secure, following the government’s own guidelines, and these new regulations are a knife to the heart of the sector.” 
 
Tourism and Indoor Entertainment
 
Indoor play centers including soft play and trampoline parks must close in tier 3 areas. As should casinos, bingo halls, bowling alleys, skating rinks, amusement arcades, escape rooms, cinemas, theatres, snooker halls and indoor concert venues.
 
In tier 1 or 2, they can open but must close at 11pm unless a performance starts before 10pm. Public attendance is permitted but limited to either 50% capacity or 1000 people.
 
Retail
 
The good news for retailers is that all stores can reopen across the UK from December 2nd regardless of what tier their local area is in although existing Covid-19 restrictions will apply.
 
Helen Dickinson, Chief Executive of the British Retail Consortium said: “While retailers have stepped up their online delivery over the course of 2020, the bulk of Christmas shopping tends to be done in store. 
 
“The government’s decision to keep all of retail open will help to preserve jobs and the economy and keep Christmas a festive occasion for everyone.”
 
Personal Care
 
Hairdressers and barbers can reopen across the various tiers along with nail salons, spas, tanning salons, tattoo parlours, massage parlours and spas although steam rooms and saunas remain closed.
 
Gyms
 
Outdoor exercise classes can continue but “higher-risk contact activity” shouldn’t take place. Neither should organised indoor sport, physical activity or exercise classes. 
 
The tier system is due to stay in place until Spring 2021 with regular bi-weekly reviews of each area allowing some movement between tiers if possible. 
 
The first one is scheduled for December 16th which would allow some pre-Christmas trading to occur but even this window of opportunity might come too late for some businesses. 
 
While the awaited tiers system might have brought some hope for businesses in some areas, it might have sealed the fates of several more if there is no realistic likelihood that they can reopen and resume a regular service or operations before Christmas or even New Year. 
 
Now would be the perfect time to get in touch with us to arrange a free consultation to discuss what decisions you can take now to help your business make it into 2021. 
 
The sooner you make contact, you’ll find that you’ve got more options and room to move than you might have believed. 
 
The die has been cast until at least midway through December - you can spend this time worrying about the future or taking charge of your future and finding out what you can do, right now, to make it a better one after this Covid Christmas.

covid shopper
You’ll know when the best time to push your two for one special offers are; what drinks go best in happy hour and what combination of flavours work best to complement each other at any given food service. 
 
You’re adept at influencing and positively manipulating your customers wants and needs before they realise they are displaying them so you understand just how important customer behaviour is in influencing and driving their decisions. 
 
Some of the most fascinating and profitable insights can be gained in the space between what customers say they want and what they actually purchase. 
 
Understanding this small but significant space can help us make sense of some seemingly contradictory evidence based on customers' attitudes to the Covid-19 lockdowns currently in place. 
 
Opinion polls found that over 70% of respondents agreed with the latest national lockdown announced by the Prime Minister on Halloween. 
 
What happened next is where the deficit between the opinions and actions meant that restaurant and bar owners who fundamentally understood their customers could take advantage of their desires. 
 
When it was announced that the lockdown was due to be implemented, it gave customers a four-day window to react in advance of the lockdown. As an overwhelming majority favoured the lockdown, you might think that they would take the extra time to prepare for an extended period at home and maybe get some extra supplies and luxuries to pass the time more agreeably. 
 
What actually happened, as any good pub philosopher would have told you, was that hundreds of thousands of people went out to enjoy themselves. 
 
OpenTable, the site that tracks online restaurant reservations, reported that bookings rose by 11% the day after the announcement compared to the previous year and on the day before the lockdown was imposed, they rose by 70% annually. 
 
Data for foot traffic at retail parks showed that they also spiked in the three days before the lockdown - being greater than their 2019 levels for the first time since the Covid-19 safety measures were introduced in March. 
 
Another piece of the puzzle landed last week following the news that a largely successful Covid-19 vaccine had been developed - online searches for holidays in 2021 leapt by 48%.
 
At first glance it appears counterintuitive. People are in favour of lockdowns and tighter restrictions yet in case after case, it appears that actions speak louder than words. 
 
35 million people took advantage of the “Eat Out to Help Out” scheme in August even though Coronavirus infections remained stable.  Once the scheme ended, restaurant custom plummeted. When restaurants were told that they would be closing, they were packed in the three days leading up to the final bell.  
 
Similarly, NHS Track and Tracers are reporting increased difficulties in reaching potentially infected individuals by mobile. 
 
One explanation is the increasing reluctance to answer calls from unknown numbers but equally the suspicion remains that there could be financial repercussions from being ordered to self isolate so it would be beneficial to practice feigned ignorance to avoid it.  
 
Weighing the evidence then, what is the most likely result for hospitality businesses when they are finally allowed to reopen, for argument's sake, without restriction on December 2nd? 
 
Full houses as families and individuals take the chance to enjoy a meal and drink out with friends and family they haven’t been able to meet up with in weeks and months. 
 
The cloud on the horizon is that all expert analysis, evidence and experience points to the immediate return of the tiered local system of restrictions being resurrected and ominously, according to the Bank of England, staying in place until at least the end of Q1 2021 - that’s March. 
 
This is when the extended Coronavirus Jobs Retention Scheme (CJRS) furlough is due to expire although some expert predict that this would invite a similar surge in cases so the only adequate response would be more lockdowns - either locally or nationally - in the New Year. 
 
The answer lies in finding the sweet spot between the competing demands of public health, normal economic activity and individual freedom. There is some recognition of this among policy makers as the second lockdown period is already shorter and less restrictive than the first as they recognised that despite what people were telling opinion polls, more would be willing to break rules to socialise and shop.
 
If you’re relatively successful at reading and understanding customer behaviour in your restaurant, cafe or bar then you could try to apply the same judgement criteria to what the official response will be. 
 
Weighing up the competing motivating factors - will the lockdown be in place for Christmas?  Will they waive the rules for a week but look to impose a stronger, longer lockdown afterwards to make up for it?  Will more people welcome stronger restrictions in the traditionally darker and quieter months of January and February? When will the first virus trials and inoculation programs be likely to be implemented? Will this affect your customer base? - it might if it’s disproportionately made up of senior customers. 
 
Everybody has opinions about how to best combat and beat the virus but if you run a hospitality business then it might be viable for you to apply your innate knowledge of what people eat, drink and do rather than what they say they do to build a reopening plan based on this evidence. 
 
Combined with your existing customer data, you can produce a draft roadmap that could help you with your stock, supply and staffing requirements in advance of the busiest season of the year. 
 
You’ll have to make contingencies and be agile - what services could you offer under various types of local lockdown for example - but there’s no reason you can’t start laying the foundations of your winter recovery right now. 
 
Another easy step you could take would be to get in touch with us to arrange your free initial consultation. 
 
Like you, we don’t have a crystal ball, but we do understand our industry and we know how creditors, HMRC and other businesses dealing with administration and insolvency think and act. 
 
You can use what’s left of the enforced downtime to shore up your company’s financial defences so that if there’s another unexpected and unwanted closure, you’ll be in better shape to see it through.

bar
Whether it’s a cosy local snug just off a village green or a vibrant chrome and glass city-centre bar with it’s own piano and regular jazz standards being belted out, the pub and bar are often considered the beating heart of British society. 

But for a long time now they have borne the brunt of a range of blows so that for some it’s a surprise that they are still open at all, let alone being able to turn a profit. 

They’ve seen rises in VAT and business rates (even temporarily offset they will still have to be repaid at some point in the future); big increases in property prices which they have to pay rent on - which has also increased.

They have had to dispose of beer stocks which has cost them financially especially as they have to be done correctly and legally. 

The smoking ban caused them to invest more in outside areas even if the demand was minimal and they didn’t really have the footprint to accommodate it and not one but now two recessions which reduce the amount of disposable income customers have to spend on entertainment. 

The latter is a key point as going to the pub is a habit and once broken, it’s hard to get back into the habit of doing things you once did unthinkingly.  Especially if there’s a cheaper alternative. 

Supermarkets have been in competition for pubs for years aiming to undercut them in both price and volume. Whereas the pub has a unique selling point of a communal and convivial atmosphere, a pub under coronavirus restrictions with social distancing and masks is quite a different proposition from a bouncing Saturday night boozer. 

Even if customers have to spend more time at home, they can still enjoy a drink and as supermarkets’ range now expands into drinkers’ trendy favourites such as craft style beers, artisan gins and prosecco, the arguments for going to the pub are fraying. 

Demographic changes are also having an effect. For anybody over the age of 40, we now live in the age of pre-loading. 

This is where young adult drinkers buy their alcohol from supermarkets or off licences and consume it at home before venturing out to their pub or bar of choice.  Because they have already imbibed a larger amount, they will not be spending as much in these places and will be simply topping up their buzz rather than creating it. 

Every good publican is a pragmatist and the situation facing pubs and bars is clear. 

More than 50% of late-night businesses including pubs, bars and nightclubs have seen a 60% drop in revenue since the 10pm national curfew was introduced on 24th September 2020. 

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) said that pubs had seen an immediate impact on trading.

“If the curfew doesn’t work in reducing infections of the virus, it should be reviewed immediately to give pubs a proper chance of recovery. 

“If it doesn’t work and isn’t removed then it will mean that hospitality businesses and pubs are unfairly singled out.”

The Night Time Industries Association (NITA), a pressure and promotion body made up of independent venues and entrepreneurs estimates that 60% of their members have reluctantly started to make staff redundant - before the winter Job Support Scheme is activated. 

NITA Chief Executive Michael Kill is blunt when he estimates that the Winter Economy Plan is not enough to support the sector citing the combined effect of reduced economic support and ongoing restrictions of varying degrees of severity. 

He said: “Our sector must not be under-valued. We need to challenge the government when restrictions result in the systematic closure of an entire Industry. 

“In the coming weeks, without further support, we are facing a catastrophic collapse, which will see thousands of businesses and jobs lost.”

What can be done?

From the days of speakeasies in the prohibition era in the US, to the lost art of the after hours “lock in” in the UK - pubs and bars have always had an entrepreneurial streak.

Savvy landladies and landlords have always been one step ahead when it comes to helping their customers so there are several ways they can use their natural inventiveness and initiative to meet the moment and keep their doors open.

Service - with a social distance

Like restaurants, pubs that serve food can continue with some sensible changes and allowances made. 

As well as adequate socially distanced table spacing for customers, an advance booking system can be brought in so footfall and traffic can be planned and monitored in advance of busy periods. 

Food ordering itself can also be switched to an app with daily menus displayed here or printed on single use paper.   

A lot of pubs are doing away with cutlery and condiments on menus and replacing them with hand sanitizers as well as giving staff PPE and making sure they are washing their hands regularly and making a public show of meeting the requirements to reassure customers.

Indoors Outdoor

The Beer Garden has always been a USP for pubs and now it can be a crucial tool to help them keep their services going. 

It’s easier to keep socially distanced outside and it can also be designated as a performance area so pubs with music, comedy and live quizzes will be able to continue these popular activities as long as they conform to Covid-19 guidelines. 

Karaoke and professional singing in particular will work but with some changes.  Music volume should be turned down and even song choices considered to avoid singalongs which can increase transmission.  It sounds like a small detail but an important one.  

Pints to go

Pubs serving food can not only consider a food takeaway service if it’s already being cooked, but some enterprising establishments are offering a drinks delivery service within a small radius. 

In this instance one staff member drives and the other keeps the drinks stable and takes them to the doorstop but it’s an example of changing staff roles to help keep the business going and keep them employed rather than being furloughed or even made redundant. 

Government support

As well as the various different levels of government support available to all businesses including the newly updated and enhanced Job Support Scheme, there are others that are specifically targeted at pubs and other hospitality businesses.  

They are temporary VAT rate cuts from 20% to 5% for four months until March 31st 2021 as well as VAT payment deferrals and business rates relief for hospitality businesses. This will be welcome news for city centre establishments that’s rateable value will be out of proportion with similar sized businesses in more rural or lower income locations. 

Pubs are classed as hospitality businesses so can also apply for cash grants of between £2,100 and £3,000 per month which can be backdated to August for those businesses that had to close due to local lockdown rules but did not get any previous additional financial support for their loss of trade. 
  
Time please

Even with the most ingenuitive solutions sometimes things just don’t work out. 

The number of pubs in the UK has been gradually decreasing since 2002 and 2020 could see the largest number for years close their shutters for the last time.  

Despite being so much more to so many people, a pub is also a business at the end of the day and as such has some options and solutions available to it as a result. 

They can obtain an insolvency moratorium which is a relatively new legal protection that gives companies up to 20 working days “breathing space” to begin to restructure themselves and keep creditors at bay while they do it. 

This will allow them to consider other measures to secure their business and give it the best chance to recover and relaunch through a CVA or an administration.  

But sometimes even this option is insufficient to rescue a business with too much debt or other liabilities. The pub could even be solvent but the owner might decide that the coronavirus situation gives them the ideal opportunity to move onto other projects. 

Not every business that goes into liquidation is insolvent but there are always options to make sure a business closes properly.

The bell ringing in a pub is always a sad sound because it means the end of your night there but sadly the bell is tolling for many within the industry themselves. 

Even with financial support, until the Covid-19 situation is resolved, the outlook for pubs and bars is going to be cloudy for the foreseeable future and will give owners the time to consider bigger questions about their future ambitions and careers. 

If you’re one of them then we can help you find some focus. 

Get in touch with one of our expert advisors today and we can arrange a free virtual and free initial consultation held whenever you want it.

We can set out a slate of available options once we better understand your situation and whether you’re hoping to give your business a fresh start or are calling time on this particular venture. 

No matter what you decide, we can advise and help you plan the most efficient and stress free way to get there so you can finally enjoy the drink you’ve finally earned.

last chance
A report this week from the National Audit Office indicating that up to £26 billion might not be repaid from the Bounce Back Loan scheme because of inability to pay or outright fraud has poured petrol onto the bonfire. 
 
This would equate to a staggering 60% of recipients of the scheme which, to date, has loaned some £38 billion to 1.3 million applicants. 
 
Gareth Davies, head of the NAO, said: “Government will need to ensure that robust debt collection and fraud investigation arrangements are in place to minimise the impact of these potential losses to the public purse. 
 
“It should also take this opportunity to consider now the controls it would put in place to protect against the abuse of any future such schemes.”
 
The BBLS in particular has been hailed as a success precisely because of the positive lending criteria which has been less stringent than regular business finance applications.
 
The critical time pressure to get the scheme online along with genuine criticism from businesses who struggled to access funding in the first phase of coronavirus business support meant that the usual affordability and credit checks were replaced with self-certification measures and also backed with government guarantees.
 
So if they remain unpaid for whatever reason, then the public purse would make up the shortfall to the lenders. 
 
The loans are not due to begin being repaid until May 2021 when the full picture will start to emerge but the fact the NAO are drawing attention to these potential discrepancies now is a significant warning on how seriously any non-payment of Covid-19 related financing will be treated. 
 
The report comes in the same week that HMRC are giving businesses a final reminder to thoroughly check their CJRS claims for inaccuracies before the cut-off date of October 20th 2020. 
 
The main errors they will look for in submitted claims include claiming for employees that weren’t eligible for the scheme and using wrong calculation or reference figures when determining furlough pay. 
 
Self-declarations made after this date are “potentially subject to penalties and even prosecution in the most severe cases.”
 
If you’ve received a warning letter from HMRC then there are some precautions you can take right now that might be useful further down the line.
 

 
If we were to use one word to describe HMRC’s approach to debt recovery then it would be relentless. 
 
There are no grey areas - if you owe them then sooner or later, they will find out and pursue you without rest until you pay or make alternative arrangements. 
 
But they are also fairer and more reasonable than you’d think if you are straight and honest with them from the beginning. 
 
If you do owe them or if you believe you might have inadvertently contravened any of the CJRS’s many rules and stipulations then get in touch with us today
 
We constantly help clients with HMRC arrears to work through them to a conclusion - find out how we can help you reach one too.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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