How sector reopens and start date ‘mission critical’

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UKHospitality (UKH) chief executive Kate Nicholls told viewers of The Morning Advertiser ​MA500 online conference how much the industry had lost in terms of cash and people over the past year.

She said: “We started 2020 at £130bn turnover and revenue at 7% of GDP. At the end of 2020 that had fallen by over half so £70bn wiped off the revenue off the industry as a whole.

“We lost £200m a day or £8 an hour in lost sales and almost all of that foreign export earning in terms of foreign tourist spend in the UK, eliminated all together.

“We started with 3.2m people employed, sadly we have lost 660,000 in terms of headcount – 28% lower as at now but clearly with over a million people still protected by furlough, that’s potentially the tip of the iceberg.  Unfortunately 10,000 premises closed for good.

“At our lowest ebb, December sales down 84%, 78% for food-led businesses for those who were able open and ended the year with 95% of our businesses closed and started [this year] with a third lockdown.”

When dissecting down to the cost to each pub closing has, the trade body estimated this would be thousands a month.

Significantly worsening statistics

Nicholls added: “Just one in five of our sector have cash reserves sufficient to get them through until the end of February/beginning of March, to the date of the Chancellor’s Budget when we look forward to hearing about further support for the sector.

“It’s quite clear that without additional investment equity or financial support from the Government, the industry is going to be seeing those statistics I started with, significantly worsening.

“Each and every pub, on average, it’s costing them £10,000 a month to be closed, for restaurants it’s £20,000.

“The sector as whole has a cash burn net of Government support of £0.5bn a month, remaining closed. It is quite clear therefore, there is an inadequate level of support coming through from Government to maintain that for any length of time.”

Voices from across the sector have called upon the Government to issue another roadmap out of lockdown with a focus on exactly how it expects pubs to operate and the measures that will be in place.

“[We need] a clear staged exit strategy for the industry. Not just about reopening and the date on which we reopen, although that remains mission critical as you’ve heard how much it is costing to remain closed,” the UKH boss urged.

“More importantly it is about the terms and conditions on which we reopen, how long any residual restrictions last and crucially, how long those social distancing restrictions last going forward.

“Even opening in July and September with the initial Covid-secure protocols, which remain in place and are likely to remain in place for a little time longer, the industry was not profitable. Over the course of that period on average was 60% of normal revenue levels and only got to breakeven point for one week for the 12 week period we were trading with those restrictions.

“After that, it went significantly downhill and the best the sector was achieving was minus 40% and minus 60% of normal revenue levels as we went through the cascade of tiers.

“We are asking Government to set out, when the Prime Minister come to the House of Commons on 22 February, when we know where we are at in terms of vaccinations, to link our reopening and removal of restrictions to the vaccine roll out not just cases we are seeing so we can have a clear statement of intent that as the level of vaccinations increases, as we reduce those who are exposed and have the highest risk of hospitalisation and death, the over 50s in the main, we can then make sure we are progressively seeing a cascade and slide down those restrictions.”

Lateral testing key

Not only this but Nicholls wants quick testing in place for workers in the sector and highlighted how important this was for younger team members who won’t be eligible for the vaccine until later in the year.

She said: “We do want to see the introduction of rapid testing in our segments so we can have rapid lateral flow testing as part of the community but also in our workforce so we can keep people in work.

“For those areas of the workforce that are younger, who are going to be later down the queue for vaccination, lateral flow testing can be a key enabler to open those harder to open segments of our industry.

“[Parts] like nightclubs, events, conferences. We need to make sure the Government’s exit strategy covers all those elements of hospitality.

The industry needs to be in a fit state to recover after the initial survival period, Nicholls highlighted.

She added: “Many businesses have survived the ‘black swan’ event of last year. We now need to survive the ‘grey rhinoceros’ where we are running alongside an ever-increasing amount of debt and ever-minimised revenue stream as we have got social distancing restrictions and that cashflow crisis we need to manage.”

“If we are to rebuild, we need to get shattered balance sheets rebuilt, to tackle the debt to allow us to help the broader economic recovery and to do that at pace.

“Hospitality accounted for almost all the GDP growth in August but equally, accounted for almost all the GDP decline in October when we were subject to those restrictions.”