In previous editions of Market Recovery Monitor we have tracked how the UK pub, bar and restaurant market has gradually re-emerged from the first national lockdown, culminating in over 76% of total licensed premises open at the end of September.

In our most recent edition (which covers sites open and trading as at 31 October – just prior to the second lockdown in England), we note that over 12,000 sites closed their doors during October following the introduction of tiered regions in England, the Welsh national lockdown and restrictions imposed in Scotland.

Whilst this has clearly been superseded by the second lockdown in England which came into effect on 5 November, it provides sobering data that provides some insight on how the industry may emerge from the latest set of government restrictions. From our data, only 52% of licensed premises in England were open and trading in Tier 3 areas – where alcohol can only be served with the purchase of a substantial meal and different households are unable to meet in outside areas of venues (such as beer gardens).

The impact of the 10pm curfew and table service was also apparent, with only 63% of total drink-led sites open - which typically rely on later night drinking in groups -, compared to almost 80% of food-led sites, where table service is less of an operational challenge.  This illustrates just how difficult it is proving to run sites profitably under the most strenuous levels of restrictions.  

Whilst the full lockdown in England is currently set to end on Wednesday 2 December, exactly how and when the government will allow operators to emerge remains uncertain. Expectations at the moment are for any relaxation of lockdown measures to be on a regional or tiered basis – this could mean that we return to similar levels of sites trading as seen pre-lockdown, with only a low proportion of sites in Tier 3 areas trading, and a skew towards food-led operators.

Although a necessary evil, continuing under the tiered system for an extended period could prove particularly challenging for independent operators. Independents typically do not have the benefit of a portfolio of sites across the country, enabling at least some sales to be generated from less restricted areas, whilst managed groups tend to have greater financial resources to help them ride out the storm.  This is borne out by the data, only 63% of independent businesses were open pre-lockdown, compared to almost 82% of managed premises (operators with more than one site across a particular brand).

Whilst government assistance in the form of an extension of the furlough scheme is welcome, there is concern that this is a signal to further local or regional lockdowns in the future, which will be of huge concern to management teams. The costs involved for operators to gear up for re-opening following an extended closure – training, cleaning, re-stocking and advertising amongst others - are significant, and the funding may simply not be there to re-open and decisions may be made to remain closed until the longer term picture becomes clearer.

Although the recent developments with regards to a vaccine are highly encouraging, it is likely to be some time before its effects translate into a meaningful change in how hospitality businesses are allowed to operate, and operators need to remain agile in the meantime.

What is becoming clear is that a strong dose of dynamism and determination will be required to stay in the game, as there are undoubtedly further twists and turns ahead as the sector re-emerges from this latest lockdown.