Can the hospitality industry fight back after the lockdown lifts?

As part of a new series, Business Rescue Expert is going to be looking at individual sectors and businesses that have been affected by the coronavirus pandemic. 

 

We’ll look at how they’re managing and adapting to the new set of economic circumstances and look at how they will emerge from the lockdown and hope to flourish afterwards. 


Will the hospitality industry be able to fight back after the lockdown lifts?

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Businesses in every UK employment sector have suffered as a result of the Coronavirus pandemic and lockdown but arguably the worst affected has been the hospitality industry. 

 

Restaurants and cafes have seen the most temporary closures with approx. 84% of all businesses in the sector closing their doors. This is higher than both Construction (71%) and Manufacturing (60%) and way above the national average of 48%. 

 

Additionally, 69% of staff have been furloughed under the Coronavirus Job Retention Scheme (CJRS) with many unsure what the future could hold for them.

 

Catering Scotland recently held an online forum for restaurateurs to gauge their feedback and feelings on the Covid-19 pandemic lockdown and the response was stark – that if the lockdown restrictions continued then most pubs and restaurants across the country and the UK would be looking at insolvency in the second half of the year.

 

Additionally several of the top names in the restaurant industry including Tom Kitchin and Nick Nairn issued a joint declaration aimed at increasing government support specifically for the hospitality industry and looking to recognise the unique nature of food preparation, service and consumption in a restaurant setting. 

 

They would like to see the CJRS extended beyond the current end date of October with “further flexibility and phasing to support businesses until at least Q1 2021”. 

 

Additionally they would like to see the government support a 12-month rent free period with reductions “for as long as social distancing is required in our premises” and the business rates holiday extended until the end of June 2021. 

 

One interesting idea to encourage people to come back to restaurants once the lockdown is lifted would be for the government to develop and roll out a “Covid Quality Assurance Scheme” in order to reassure their customers about the steps that have been taken to protect them from the Coronavirus. 

 

They rounded off with a warning: “Put very simply, social distancing simply does not work in most restaurants, bars and hotels. 

 

“People visit to enjoy a memorable experience with a high level of service and personal interaction, and this could never be achieved if staff had to maintain strict social distancing and wear PPE.”

 

“Hospitality already operates on a high cost base. In recent years we have faced additional spending including rent hikes, increased food and beverage costs, the new National Living Wage and higher business rates. Social distancing will result in revenue drops that will make most businesses unsustainable.

 

“There is also worrying evidence suggesting that many people don’t feel it’s safe to eat out and will avoid visiting us even after lockdown is lifted. Against this background, if furlough ends and restaurants, bars and hotels are allowed to reopen but with social distancing enforced and no income from major events and festivals, the result will be a tidal wave of business closures and mass redundancies, increasing unemployment and the strain on the welfare system.”

 

The earliest official date that some establishments can look at reopening on in England is July 4th although guidance could change in the meantime. 

 

Some larger chains such as McDonalds and Costa Coffee are working on a staggered roll-out for their drive-thru and takeaway outlets including enhanced social distancing measures, PPE use and only accepting contactless payments. 

 

Industry trade body UKHospitality recently submitted a 75-page document to the government outlining a broad approach which would see some small but important signifiers vanish. No salt and pepper shakers on tables, customers won’t be allowed to stand at bars and an end to staff receiving cash tips.

 

The document is part of UKH’s #FAIR4Hospitality campaign designed to promote a fair and timely return for the industry this summer. 

 

Chief Executive Kate Nicholls said: “The non-negotiable principle when it comes to reopening is that the safety of our staff and our customers is paramount. When the time is right for businesses to reopen safely, it’s essential that clear and helpful protocols are in place to help them get back up and running as safely as possible.

 

“The size and diversity of the hospitality sector means that there’s no one-size-fits-all approach to reopening. 

 

“Across our industry there are many sub-sectors and widely different business models. The practical challenges in reopening faced by a pub or a bar will be different from those faced by a holiday park, for instance. Even within the same sector, there’s bound to be a huge difference in the size, shape, location and layout of similar businesses.

 

“We will be ready to restart in England on July 4th and other parts of the country when allowed, but for the whole country to come together again after lockdown, governments must invest in a fair and timely return for hospitality and all those who rely on it.”

 

One of the unknowns will be the lasting changes to customer behaviour that the lockdown has brought about and whether this will be temporary or permanent.  

 

As people get used to cooking at home or relying on the delivery services of Uber Eats or Deliveroo that are expanding their service offering to include supermarkets and drink suppliers, will the eating-out experience return quickly, if at all?

 

While the online competitors have eliminated the fuss of going out and eating, the additional health and safety requirements might lead many customers to conclude that until any lockdown period is completely lifted then it’s just not worth popping out to their local Italian restaurant, no matter how much they’ve previously enjoyed it. 

 

This appears to be the judgement of the Casual Dining Group who own chain locations such as Bella Italia, Las Iguanas and Cafe Rouge and have filed notice to appoint administrators this week creating further uncertainty for their 6,000 employees.

 

The dilemma for the hospitality industry here then is do they pivot to meet their customers in this new normal by providing a delivery service, looking at open air street food type serving opportunities rather than chic basement bistro bars or bet that social distancing is a necessary but temporary fad that will be forgotten in a wave of customer excitement to regain autonomy and elements of their pre-lockdown lives as soon as they’re allowed?

 

It’s hard to imagine a more difficult set of circumstances for a business to operate under than the ones restaurants, cafes and other hospitality businesses are facing today. 

 

Not only is your business closed and staff probably furloughed, but reopening could depend on completely rearranging your workplace and restructuring your working practices. 

 

Then you have to try to coax back customers who will naturally be wary of the new arrangement and might “wait and see” before committing to visit – using your online rivals instead who can just drop the product off at their home.  

 

What price ambience, atmosphere and Je Nais Se Quoi?

 

We can’t answer that question. We struggle to reach a consensus opinion on whether you can have chips with pizza but what we do know a lot about is helping companies that are worried about earning their crust. 

 

Get in touch with us today and we’ll arrange your free initial virtual consultation quicker than you can order a takeaway delivery. 

 

Once we fully understand the unique circumstances facing your business we can provide a menu of options for you to pursue depending on what your goals now are. 

 

It could be looking to reopen and return to profit as quickly as possible, it could be to restructure to get through this turbulent period and be in the best possible shape to push on whenever the lockdown is behind us, or you might have decided that the right call is to close and move onto your next challenge. 

 

Whatever you decide to do – we’ll give you the best advice and path to achieve it.

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