Hospitality: Winter Worry’s

The Coronavirus pandemic has provided a rollercoaster ride for the hospitality industry over the past six months – none more so than those businesses operating within the casual dining sector.

Those smaller, independent businesses dedicated to offering a sole dine-in service had their income turned off virtually overnight back in March – and this financial blow was slightly cushioned for those able to offer takeaway services.

After four months of minimal trade, a lifeline was thrown to restaurants via the Government’s ‘Help Out To Eat Out’ scheme in August, where restaurants were able to offer 50 per cent discounts to diners and claim the other 50 per cent of the discounted bill back from the Government.

It was a move that was designed to be a win-win for all parties. It made eating out more affordable for families, and it gave restaurants soaring levels of custom to help them claw back losses from the previous quarter. The scheme proved a short-term success – with more than 85,000 restaurants claiming more than £520 million in discounts from the Government.

The Help Out to Eat Out scheme only lasted for the duration of August, and the initiative also arguably helped to mask an evolving problem for casual dining businesses that has been brought to the fore during lockdown – that more consumers are favouring takeaway services instead.

In many cases takeaways are a cheaper option than eating in – a key factor at a time when many people’s disposable income is lower than usual – and attention also needs to be paid to developing the general public’s confidence when it comes to dining out.

When you throw these two factors into the mix alongside a new national lockdown, and a possible return to tiered levels of risk for different parts of the country, it is clear that any casual dining business that wants to survive needs to adapt its offering to tap into public demand for takeaway services.

A recent survey by a professional services firm found that in the 12 months to September 2020, there were 1,464 company failures in the hospitality industry compared to 1,304 the year before. Unsurprisingly, the survey found that restaurants suffered the most insolvencies during the third quarter – 156 in total – a trend that is likely to continue.

On a positive note, coastal accommodation providers experienced a strong summer throughout July, August and September as they benefited from pent-up demand from families opting for a summer holiday in the UK because of the ever-changing travel restrictions to other countries.

Plymouth, Bournemouth and Brighton recorded occupancy levels above 80 per cent in August, close to those of 2019, according to STR data.

The casual dining sector is now entering one of its traditionally busiest times of year in the build-up to Christmas – and with it looking increasingly unlikely that Christmas parties will be able to happen in their usual format this year – planning for how they are going to weather this period is going to be crucial to their long-term survival.

The extension of the initial furlough scheme – where the Government will pay 80 per cent of a staff member’s unworked hours – until the end of March will alleviate some pressure on business’ cashflow, and may possibly bide them some more time to plan a way forward with assistance from a restructuring and insolvency expert.

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