Second lockdown threatens recovery and future nature of hospitality.

Second lockdown threatens recovery and future nature of hospitality sector

The government’s announcement of a second lockdown for England after the widening roll out of its tier system in connection with the nature and deployment of regionalised lockdowns, now means that businesses - particularly those hardest hit in the hospitality sector (many of whom have already been successfully negotiating the ‘Covid-secure’ provision now required of them) - now face even more economic uncertainty and challenges in the run up to the festive season when they might normally have expected to make up for poorer performance across other parts of the year.

Wales has already been subjected to a so-called ‘fire-breaker’ lockdown on account of concern over its hospitals not being able to cope with a projected potential rise in hospitalisations, should the virus spread as fast as it is believed to have been spreading of late (the so-called ‘second-wave’), and Manchester, London and the North East are also experiencing restrictions.

According to the British Retail Consortium (BRC), overall store vacancy rates have increased from 12.4% in the second quarter of the year to 13.2% in the third (the highest level it has been since 2013, it is claimed), with UKHospitality and CGA reporting that sales in the hospitality industry in particular have taken a hit (declining by almost half in the three months leading up to 30 September 2020).

“These figures are a great indication of how deeply consumer confidence has been impacted due to the localised lockdowns brought about by the surge in COVID cases. With over 20 million people in the UK now wanting to have close to no human interaction when shopping, retailers and hospitality businesses would do well to think of alternatives to drive sales and footfall while maintaining the safety and confidence of their clientele,” said Will Broome, CEO and founder of the fintech app for retailers and the hospitality sector, Ubamarket.

As a result of the tough measures taken so far by government to control the spread of the virus, the economy as a whole continues to take a battering. In a statement on 18 October 2020, head of the Bank of England, Andrew Bailey, said that the UK now faces “an unprecedented level of economic uncertainty” (Britain’s economy having shrunk by 20% in the three months to June as the coronavirus pandemic took effect - the biggest fall of any large advanced economy, it is claimed). In an online event held on Sunday, 18 October 2020, the Bank of England head suggested that there is significant risk of economic growth continuing to be lower than expected, with output at the end of the third quarter to be 10% lower than the end of 2019.

October also saw the end of the government’s furlough scheme - although it has since been renewed - and it remains to be seen what the true unemployment and employment landscape will be like in the wake of Covid.

“The pandemic’s human cost, in jobs lost and livelihoods impacted, is slowly being laid bare. The number of people claiming benefits has surged to 2.7 million and two thirds of a million fewer people are working now compared to March,” said Jack Kennedy, UK economist at the global job site Indeed, commented recently.

The government have now launched a Job Support Scheme, designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. It sets out to help keep a business’s employees attached to the workforce, and opened as of 1 November 2020 to run for six months (the company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government through wage support and the employee through a wage reduction, and the employee will keep their job).

The government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the government contribution has not been capped. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

“Lockdown restrictions are likely to re-emphasise the earlier trends that we saw around springtime which showed positive sales growth for direct to consumer and supermarket companies. Indeed we have already seen a significant shift in consumer behaviour which has boosted growth for those companies in Q2 and to a lesser extent in Q3 but which now look to boost growth again in Q4,” commented Mark Lynch, partner at independent corporate finance advisory firm, Oghma Partners, on the impact of a possible nationwide lockdown on the food and beverage sector.

“However on the other hand this does mean we are likely to see more long term problems for food to go and food service providers that are unable to service clients as per normal – the sad fact is that the longer the restrictions are imposed the more end user businesses will go bust. This includes pubs, restaurants and the more food service manufacturing capacity and, to a lesser extent, food to go capacity we will see taken out of the market. These may be seminal changes that we are seeing.’’

John Sall

It is with great sadness that Pizza Pasta & Italian Food magazine must report the passing of John Sall, CEO of Harlequin Printing & Packaging who was known to many throughout the sector. Founded over 25 years ago, Harlequin established itself as a manufacturer of printed matter for a number of patented product lines, developed specifically for QSR, retail and food markets with customers ranging from independent operators and SME’s to globally recognised high street brands, servicing contracts throughout UK and Europe and offering expert knowledge and experience to the industry at large. “On behalf of all his friends at Just Eat, we are all truly and deeply saddened at the news of John’s passing, and all our thoughts and prayers are with his family at this time. He was a true partner to Just Eat from the very early days back in 2006 through to today, came on the growth journey with us and always went the extra mile to help us out, and always with a big smile on his face,” said Graham Corfield. “On a personal level, John was a true and trusted friend, always great fun to be around and always caring passionately about family and friends. He was deeply generous to everyone around him, putting everyone ahead of himself, and always a fantastic host. Despite him being a hardcore Welsh rugby fan, and our friendly cross-border rivalry and banter, I truly cannot think of a more honest, genuine, caring and trustworthy man I have had the honour of calling a friend in my lifetime. He will be sadly and deeply missed by so many of us. Rest in peace John x.” “John was one of the most generous, supportive and successful people I knew. He was the life and soul of a party and he also had a very wise head. He was one of the people I would call if I wanted to talk through anything. Personal or business,” added Maurice Abboudi. “John was a true family man. His wife, Dee, his kids, his parents and his brothers, Booie and Steve, were everything to him. He will be missed more than he could ever have imagined. A huge loss to his family and his friends. Till we meet again John, rest in peace.”