Two-thirds of hospitality businesses say they will not survive another three months of lockdown
KAM has found that two thirds of hospitality companies believe they will not survive a prolonged lockdown without further far-reaching support from government. The vast majority believe a significant break or ‘holiday’ from rent obligations is required.
The study involved 211 hospitality companies. They ranged from businesses operating pubs and bars to restaurants, cafes and street food venues. It found 66% of businesses do not think they can survive a further three months of lockdown measures.
The current situation for hospitality industry in lockdown
Many hospitality businesses are at risk and need help in navigating a pathway to safety. Hospitality needs some fundamental interventions on rents and property, and on finance and loans. It’s becoming clear that much of hospitality will require a much longer extension of the furlough scheme, given that businesses will not emerge fully from lockdown for some time.
As an industry, we need to get behind campaigns such as #NationalTimeOut, spearheaded by Jonathan Downey and Hospitality Union. They are campaigning for a nine-month rent holiday, to be supported by the government.”
Referring to this #NationalTimeOut campaign, the research showed that 87% of hospitality businesses do not expect to survive without the nine-month rent holiday or some equivalent, being introduced.
“The government has moved quickly to address some of the existential challenges that hospitality faces, brought by the crisis and lockdown. As an industry we are extremely grateful. However, this research underscores the scale of the challenges, which is reflected in the current mood of the industry.
We need far-reaching and continued support, and unprecedented intervention of the order of the proposed nine-month #NationalTimeOut idea or an equivalent concept of similar scale, in order for hospitality jobs and businesses to endure this crisis and to be there to drive the recovery.” Kate Nicholls, CEO, UK Hospitality
What does recovery look like for hospitality post-lockdown?
The hospitality industry is also expecting a long recovery time before sale return to pre-Covid levels. When lockdown measures are lifted, most companies (86%) said they thought consumers would eat out less. 82% expecting consumers to drink out less.
We are very likely to see a much more cautious consumer coming out of this lockdown, at least in the short-term. Although there will be a proportion who will run straight to a pub for a cold pint, many will stick to essential only social gatherings in a bid to keep themselves safe.
While we fully expect operators to respond with well-executed and communicated social distancing measures, it means that many will operate on drastically reduced capacity placing significant economic pressure on swathes of the industry.
On this latter point, hospitality business owners seem to be acutely aware of this. The research found that 83% of those questioned expect customer numbers to be down for at least six months after re-opening; 38% said they would expect it to take at least a year for their footfall to return to pre-lockdown levels.
How are hospitality businesses adapting?
The research also showed that many hospitality businesses are working hard to pivot their business models during lockdown, as well as to support their communities. There are endless examples of this. Of the 211 participating companies, one-in-four had started offering delivery, as a result of the lockdown. 80% say they intend to continue offering this service, post-lockdown. 67% are already pro-actively planning how to attract customers back once they’re allowed to re-open.