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In light of the latest set of covid restrictions, what is next for the hospitality sector?

In light of today’s announcement by the government introducing further restrictions to the hospitality sector, Partner and Licensed Insolvency Practitioner Craig Johns, looks at the measures and provides advice for business owners. 

 

According to recent reports, just over three quarters (76.3%) of all licensed premises across Britain were open again by the end of August with the food-led sector leading the way, in large part as a result of the government’s ‘Eat Out to Help Out’ scheme.

However, as anticipated, the increase in pub numbers during August was modest with the vast majority of those unable or unwilling to re-open following the relaxation of the restrictions, remaining closed.

Re-openings were also slower in the bar sector – where only two thirds of venues are open, and also nightclubs which have been impacted by social distancing limits more than most.

Open venues across the industry will clearly remain well below pre-pandemic levels for a long time to come.  As we move further into September, venues will face the next quarter rent due at the end of the month.  Additionally, the end of the restrictions on lease forfeiture, the end of the debt enforcement moratorium and the end of the furlough scheme is fast approaching.

The government’s latest restrictions to limit gatherings to six people has also presented further challenges to operations, particularly for late night drink-led venues that rely on larger groups.

Local lockdowns and closures of restaurants and pubs

More locally in our hometown of Bolton, there have been greater restrictions enforced since the end of August, with all venues being forced to close with only take away offered.

The government has today announced that all pubs, bars, restaurants and other hospitality venues in England must have a 22:00 closing time from Thursday, to help curb the spread of coronavirus. The sector will also be restricted by law to table service only. Furthermore, severe penalties are threatened to license holders who fail to adhere to the new guidelines including limiting groups in terms of the number of household’s present.

In the larger cities, businesses face an ongoing struggle with the reduction in footfall, largely due to a significant reduction in the number of office workers and tourists.

Whilst facing these significant challenges both locally and nationally, speculation is that things will only get worse in the sector.

In light of the reintroduction of greater restrictions, business owners in the hospitality sector face difficult decisions over the coming days and weeks as to the viability of being able to operate profitably in these conditions.  This comes at a tough time, with many of the supportive measures coming to an end and at a time when cashflow is expected to be significantly tight.

Many larger chains have already been forced to act

It has been well documented in the press that a number of large restaurant chains have already been forced to act as a result of the impact of the pandemic, and just to name a few, the following have all been required to restructure in some shape or form:

  • Carluccio’s
  • Pizza Express
  • Byron Burger
  • Ask Italian and Zizzi’s owner Azzuri Group
  • Café Rouge and Bella Italia’s owner Casual Dining Group
  • Frankie & Benny’s and Wagamama’s owner The Restaurant Group

The strain on smaller independent venues and how we can assist

Whilst the impact on these larger chains is well documented, what cannot be underestimated is the strain placed on the smaller independent venues, a number of which will have been forced to close.

With uncertainty and difficult trading conditions seeming likely to continue for the foreseeable future, it is imperative that if you have any concerns, you seek professional advice at the earliest opportunity.  We have a great deal of expertise in the hospitality sector and our experienced team will be happy to meet free of charge, with no obligation, to discuss your concerns and review the viability of your business in the short to medium term.

Often, the earlier you seek advice, the more options available to your business, be that assistance in navigating these troubling times, or a more formal restructuring or insolvency engagement.

Our primary concern is understanding the business itself and the issues faced, with a clear focus on assisting the business to continue and preserving employment for staff wherever possible.

If you would like to speak to Craig you can contact him directly craig.johns@cowgills.co.uk 

Disclaimer

The information was correct at time of publishing but may now be out of date.

Business Recovery
Posted by Craig Johns
22nd September, 2020
Get in touch with Craig Johns