Lockdown causes £30bn sales loss for pubs and bars

28th July, 2020 by Nicola Carruthers

The UK hospitality sector experienced a loss of nearly £30 billion (US$38.6bn) during the second quarter of 2020 as venues were ordered to close under lockdown rules.

Bars in England were allowed to reopen on 4 July

Sales at bars, pubs, restaurants and hotels across the UK plunged by 87% during the Covid-19 lockdown to £4.6bn (US$5.9bn) for Q2, according to the UK Hospitality Quarterly Tracker, collated by data provider CGA. In comparison, the second quarter of 2019 recorded sales of £34.2bn (US$44bn). The UK hospitality sector saw sales decline by 21.3% during the first quarter of 2020, the tracker revealed in April.

Phil Tate, group CEO of CGA, said the tracker is the “clearest picture yet of the calamitous impact of the pandemic on hospitality”, with the coronavirus lockdown resulting in a “virtual wipeout of sales” for the second quarter.

The industry contributed £133.5bn (US$172bn) to the economy in 2019, an increase of 3.9%, however the rolling annual value has now dropped to below £100bn (US$129bn). For the 12 months to the end of June 2020, sales totalled £97.2bn (US$125.2bn).

Kate Nicholls, CEO of trade body UK Hospitality, said: “These latest figures highlight how precarious the present situation is. While it’s great that some businesses are trading again, for many opening their doors remains unviable, while some parts of hospitality are still legally required to stay closed.

“We are only on the very first steps in a long recovery. These figures substantiate our message that businesses still need support from government, if we want to avoid more business failures and job losses.”

On the evening of 20 March, all UK on-trade venues were ordered to close until further notice due to the Covid-19 outbreak. Three days later, the UK government ordered all but essential businesses and premises to close in a bid to prevent the spread of coronavirus. On 4 July, hospitality outlets across England were allowed to reopen.

Tate added: “This is a resilient and dynamic industry, and its reopening in July has given the whole country a lift, but Covid-19 has brought unprecedented and existential challenges. Hospitality needs and deserves the support of the government and public as it begins the long road to recovery.”

The UK government recently announced a number of support measures for the hospitality sector, however the moves were said to benefit food-led venues rather than drinks-led sites.

UK chancellor Rishi Sunak excluded alcohol from a six-month value added tax (VAT) cut for the hospitality and tourism sectors. The rate of VAT on hospitality and tourism was slashed from 20% to 5% from 15 July 2020 to 12 January 2021, however it will only apply to food and alcohol-free beverages.

Sunak also announced the new Eat Out to Help Out scheme, which will provide a 50% reduction for sit-down meals in on-trade outlets, as well as cinemas and visitor attractions. The discount will only be applied to food and non-alcoholic drinks.

During the first 10 days of the on-trade reopening in England consumers favoured returning to pubs and restaurants rather than bars, according to new research.

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