Hospitality venues anticipate permanent closures

26th May, 2020 by Melita Kiely

Almost a third (32%) of business leaders in Great Britain’s pub, bar and restaurant industry are anticipating the need to permanently close sites, according to CGA’s most recent Business Confidence survey.

London Calling

According to CGA Alix Partners Market Recovery Monitor, the pre-lockdown number of licensed premises in Britain was 2.4% lower in March 2020 than March 2019

The UK hospitality industry was ordered to close on the evening of 20 March due to the Covid-19 pandemic.

Phil Tate, CGA group CEO, said: “Industry estimates the scale of closures vary widely, from below 10% to as high as 30% of total sites. The challenge for business owners, directors and planners – as well as industry investors and suppliers – will be to understand not just how long the casualty list will be, but which will be the worse hit areas, what type of businesses are most under pressure and how individual sites will pivot to new styles of operation.”

According to CGA Alix Partners Market Recovery Monitor, the pre-lockdown number of licensed premises in Britain was 115,108 in March 2020 – 2.4% lower than March 2019.

It also showed the independent sector was the biggest segment of the market, with 74,271 sites. However, it noted the future of “those largely small businesses”, combined with almost 41,000 group-owned sites, was under threat due to the Covid-19 pandemic.

The report also highlighted that the rate of decline is set to accelerate “rapidly” once parts of the hospitality sector start to reopen on 4 July. The UK government said some hospitality businesses would be allowed to reopen from 4 July in accordance to the required physical distancing measures.

The Market Recovery Monitor showed 96% of business leaders in the pub, bar and restaurant industry are expecting a phased reopening. Just over a third (36%) believe they will eventually reopen all their sites for trading.

Graeme Smith, managing director at Alix Partners, said: “Many operators have got their tape measures out to assess the impact of social distancing restrictions on operations and capacity.

“Even with well-configured space, cover counts will be meaningfully reduced and may prompt further questions on whether it is sensible to reopen, or not, from a profit perspective.

“Location considerations will be another factor – it’s easier to foresee rural and suburban venues opening faster than those located in large city centres given there will be a significant period before offices reopen and the footfall numbers return to prior levels, particularly where mass-transit is key for commuters.”

‘Useful starting point’

Trade body UK Hospitality said the Market Recovery Monitor was a “useful starting point” to assess the state of the hospitality industry as the country moved into lockdown.

UK Hospitality’s own figures show the sector experienced a 21.3% sales drop during the first quarter of 2020.

Kate Nicholls, UK Hospitality CEO, said: “Our new #Fair4Hospitality campaign calls on governments across Britain to invest in a fair and timely return for hospitality this summer, for the benefit of local communities, peoples’ jobs, national wellbeing and the economy.

“How the sector restarts and at what pace will vary dependent on type of business and government guidance, so these figures will be useful on an ongoing basis for all those invested and passionate about our sector.

“Hospitality is ready, with the right support, to play a leading role in the recovery, can help rebuild shattered consumer confidence and bring the nation back together safely over the coming months.”

The UK hospitality industry is urging the government to introduce a #NationalTimeOut to save thousands of businesses and more than two million jobs.

The initiative would see commercial properties, such as bars and restaurants, granted a nine-month rent break until 2021, while landlords would also be given the same break on any repayments.

The campaign is being led by Hospitality Union and has received widespread support from across the on-trade – including from UK Hospitality, which voiced its support last week.

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