Restrictions forced 12k licensed venues to close ahead of lockdown

10-Nov-2020 - Last updated on 28-Sep-2021 at 07:50 GMT

Trading restrictions meant almost a third of Britain’s licensed premises shut their doors on October – signalling the sector could be substantially reduced upon reopening in December, new research has found.

The Market Recovery Monitor from CGA and AlixPartners found almost seven in 10 (69.9%) of Britain’s total licensed premises were trading at the end of October – a drop of more than 10 percentage points on sites open a month earlier (80.4%) and equivalent to almost 12,000 venues closing their doors by the end of October.

The report showed many of the closures in October were triggered by the Government’s tiered system.

About half (52.8%) of licensed premises in the ‘very high’ tier were open at the end of October compared to 83.6% in the ‘medium’ tier and 82.8% in the ‘high’ tier.

Business damaging

CGA business unit director for food and retail Karl Chessell said: “Hospitality has been steadily reopening since the end of the first national lockdown and nearly 20,000 sites opened their doors again over August and September but October saw an abrupt end to the recovery.

“It is very clear from this report every new restriction damages businesses’ ability to trade. With England now in a second lockdown, we are unlikely to see Britain’s licensed premises return to the levels seen in the summer – let alone pre-pandemic – for a long time.

“Financially robust companies should be able to sustain themselves through the lockdown and the extension of the Government’s furlough scheme will undoubtedly save some businesses. But much more support is going to be needed to prevent a wave of permanent closures over the winter.”

The Market Recovery Monitor found just 63.1% of wet-led sites were open at the end of October compared to more than three quarters (79.9%) of food-led operators and 81.3% of casual dining restaurants.

The study also revealed 63.1% of independent sites were open at the end of October – fewer than the 81.8% of managed venues in operation.

Significant costs

AlixPartners managing director Graeme Smith said: “The recovery of hospitality has been halted by the second lockdown in England and with the Government stating that, once lifted, the country will return to the tiered system and significant trading restrictions, the question must be whether some of these sites will ever reopen under their current ownership.

“The report illustrates the acute stress independent businesses are suffering and October’s curbs on trading will have deepened these difficulties, especially for those that had only recently opened their doors (and had borne the significant reopening costs that come with re-emerging from an enforced closure, which will now be felt again in December).

“Undoubtedly, more financially resilient managed pub and restaurant groups are in a better place to ride out the storm, however, while the recent extension of furlough does offer some security, it also raises the spectre of further lockdowns in the months ahead; with an extended stop/start period potentially worse for operators in cash terms.

“This will be of huge concern for management teams and investors, already faced with the prospect of their businesses trading sub-optimally for some time to come, and particularly as we fast approach the key festive trading period.

“A strong dose of dynamism and determination will be required to stay in the game. Now the Government has provided welcome assistance with wage costs, companies will be looking to Westminster for further support to help solve the sector’s rising debt mountain, especially when it comes to rent and the stalemate many are experiencing in negotiations with landlords.”