A long way to go

More hospitality businesses could reopen in July but there are concerns that social distancing will mean very few are commercially viable. David Burrows reports.

When the UK government’s chief medical officer Chris Whitty suggested last month that social distancing could still be in play until Christmas, UK Hospitality chief executive Kate Nicholls said she felt like she’d been “punched in the stomach”. “We knew the lockdown would go on for longer than three weeks, but I don’t think we’d thought about it being so intrusive or so restrictive for so long, and that was an incredible shock,” she told the Observer’s Jay Rayner.

A little over three weeks on and she obviously found Boris Johnson’s plan to “rebuild the UK for a world with Covid-19” slightly easier to swallow. “The prime minister gave us a sense of the shape of his plan and the journey ahead,” Nicholls said. However, for the hospitality sector the journey is shaping up to be long and painful.

Construction and manufacturing sectors will make their first tentative steps back into business this week. In June, if things go well and the virus remains under control, more shops could reopen in phases along with schools for some year groups. Restaurants, bars, cafés and cinemas will only follow on July 4th at the earliest – and even then strict measures will be set out.

Traditionally busy pubs and nightclubs could face particular headaches. “Some venues which are, by design, crowded and where it may prove difficult to enact distancing may still not be able to reopen safely at this point, or may be able to open safely only in part,” reads the government’s 60-page recovery strategy. As Greene King CEO Nick Mackenzie told The Economist last week: “The point of the pub is to socialise.”

Indeed, it is no surprise that, on Monday, the British Beer and Pub Association (BBPA), British Institute of Innkeeping and UKHospitality (UKH) wrote to the Chancellor Rishi Sunak asking for “tapered support” – including a more flexible furlough scheme until the end of 2020 – for venues that will be unable to open their doors, or will do so at a loss.

A day later and it seems they had got their wish, as the Chancellor announced an extension of the coronavirus job retention scheme until the end of October. The scheme, which has “protected 7.5m workers and almost 1m businesses”, according to the Treasury, will stay in its current form until the end of July. After that there will be “more flexibility”, as furloughed workers (hopefully) begin to return to work part-time and employers start to pay a percentage towards their salaries. Nicholls said increased flexibility for hospitality will be vital given that businesses will “not able to go from standstill to full capacity overnight”.

Indeed, full capacity is unlikely for some months to come. Nicholls explained on BBC Radio 4’s The Briefing Room last week that many of her members would open with just 30-40% of normal revenues if social distancing measures were in place. These are businesses that work on “incredibly low margins” and therefore rely on “high volumes of people”, she said. “You need 60% of revenue coming through before you start to make a profit.”

What a difference (an unlucky) seven weeks makes. As pubs, cafés and restaurants were locked down on March 23rd, the question that kept owners awake was ‘when’ they would be able to reopen. Now their worry is ‘how’ they’ll do it. Johnson’s roadmap has given the sector a glimmer of hope, the BBPA tweeted, but chief executive Emma McClarkin said “more clarity is still needed on the conditions that will be required for pubs to reopen in July”.

Indeed, the priority will be staff and public safety – something that came into sharp perspective this week as the Office for National Statistics (ONS) published data showing that male chefs were among a handful of occupations that were found to have raised rates of death involving Covid-19 (35.9 deaths per 100,000). Low-skilled workers in service operations, including kitchen and catering assistants and waiters, also had high rates of death involving Covid-19.

The ONS also released data from more than 1,600 foodservice and accommodation businesses, surveyed in April, which showed that 1.2% had permanently ceased trading, 80.6% had paused and 18.2% were continuing to trade. UKH, meanwhile, has said that 75% of its members are closed “almost entirely”, with 84% of the workforce successfully furloughed. Indeed, hotels remain pretty much shut, and while the advice to office workers remains to work from home “wherever possible” there is no demand for staff catering. And as remote working patterns accelerate the future of the office could look very different.

Demand for school meals has dropped dramatically too, and even hospital meals are also “below usual levels” noted foodservice consultant Peter Backman this week. Backman’s industry-tracking data showed better news for other areas of foodservice: 50 brands have announced they have reopened 425 stores. Subway this week announced it is reopening 25% of its outlets with “new operational and social distancing safety measures” in place. Caffè Nero will also open 33 stores, according to the Hospitality & Catering News website.

Speaking on Friday, environment secretary George Eustice said that takeaways had never been ordered to close, as he referenced the likes of KFC, Pret and McDonald’s who have all started reopening outlets – albeit in small numbers. “Our view is that probably a McDonald’s drive-thru is made for the social distancing situation that we are in,” he said. “I think it’s quite possible for these venues to reopen and reopen safely.”

Pret seems to be the one forging ahead, with 100 outlets now open. How far this can be expanded and whether the approach works commercially remains to be seen. “As a business coming out of this, we might look different, possibly smaller,” admitted chief executive Pano Christou in an interview with the FT last month. The experience also isn’t Pret as we know it. The cafés “look and feel a little different thanks to our new social distancing measures”, the chain tweeted. “For example, we’ve fitted Perspex screens at our tills and we've added social distancing floor markers.”

Whether the government’s new roadmap is equally easy to follow is a moot point. “The prime minister said he was setting out a roadmap, but if we’re to complete the journey safely a roadmap needs clear directions,” said Labour leader Keir Starmer. A new message of “stay alert”, which replaced “stay home”, has confused the public and angered devolved governments. “Our progress is still fragile,” said Scotland’s first minister Nicola Sturgeon.

For the time being most foodservice businesses will be staying shut and their future hangs in the balance.

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