In late May, following the UK Governments guidance that pubs, bars and restaurants could potentially open from 4 July, we set out our views on what the shape of re-opening programmes for operators could look like.

In our previous post, we noted that the shape and recovery of site re-openings will note be straightforward, and will be affected by many factors. In short, it was clear that the optimal approach will be different for each business.

In the latest edition of our Market Recovery Monitor – produced in conjunction with CGA - we reflect on how the UK hospitality sector has begun to re-open and restart the hospitality industry, although not quite as we remembered it.

The headline is that at the end of July, fewer than two thirds (62%) of the UK’s licenced premises were open and trading. Operators have taken the decision to open over 70,000 sites since 4 July, leaving over 44,000 units with their doors remaining closed.

Exactly how many of these sites will remain closed permanently remains to be seen, but given the level of restructuring activity - Casual Dining Group, Azzurri Group, Pizza Express, Carluccio’s and Bills have all announced permanent closures of parts of their estates, with many more chains in the process of restructuring conversations - we expect the number to be significant.  

Given the logistical challenges of “Project Restart”, such as re-integrating the supply chain, training staff and implementing safety protocols, it is no surprise that the opening programme has typically been staggered. Within one week of restrictions being lifted on Saturday 4 July, only two in five (41%) of all venues had opened their doors. Within a fortnight of the restart, more than two thirds of food pubs (69%) and high street pubs (67%) had re-opened, with only 41% of casual dining restaurants.

Why have pubs been the trailblazers, with 9 in 10 food-led pubs re-opening by the end of July, versus just 63% of casual dining restaurants? This may be down to consumer’s propensity to travel, where individuals may be more likely to venture to their local pub and stay closer to home, rather than travelling typical restaurant haunts of shopping centres, travel hubs or leisure parks. In addition, many pubs benefit from beer gardens, which may be more attractive to risk-averse customers enables the number of social distancing-compliant covers to be more easily maintained versus restaurants that might have less available outside space. It has also become clear during lockdown that the ‘app-based’ order-to-table model, popularised by JD Wetherspoon prior to COVID-19 and now implemented by all of the major pub groups, has been well adopted by customers and is likely to be a feature of pub life for the foreseeable future.  

The data also highlights variations in the re-opening of the sector across various UK regions, in particular London. London only has 61% of sites open – 12%  lower than the North East and South West of England. This is largely driven by a significant reduction in office workers in the capital prompting many operators to delay re-opening until the road map for a return to office work becomes clearer and footfall returns to a level which enables sites in London to operate profitably.   

We expect the introduction of the Eat Out to Help Out scheme to provide more businesses with the confidence to open their doors during August. As flagged in our previous post, operators will be heavily focused on driving sufficient sales to enable their units to break even, and the early success of the Eat Out to Help Out scheme -  10.54 million meals were claimed on the scheme in from 3 August to 5 August – may provide operators with enough confidence in early week trading to take the plunge and re-open. This is of course reliant on consumers continuing to visit once the scheme expires at the end of the month – many operators may choose to operate their own early week promotional scheme to maintain footfall.   

One final point to note is that it is well publicised that many operators are holding discussions or secured agreement with landlords to amend rental terms to those that are commensurate for current levels of demand. If these sites can be sufficiently de-risked, it may also pave the way for faster re-opening and enable both landlord and operator to start generating income before the damage becomes terminal.

The next issue of Market Recovery Monitor will track the level of re-openings across the sector in August, and will be available in early September.