Plans for the hospitality industry to reopen in early July, with social distancing measures in place, could be a financial and economic disaster for many, according to Oxfordshire pub and restaurant owners, and could even kill the industry.
“It is like going down a dark alleyway blindfolded!! We have so many questions.” Kay chandler, white hart, fyfield
Their concerns follow Boris Johnson’s statement yesterday, and his ‘road map’ for bringing Britain out of lockdown, but pubs and restaurants can reopen only if they continue to keep customers and staff two metres apart.
Here are just some of the questions asked by Oxford’s hospitality industry desperately fighting to keep our pubs and restaurants open, in response to our piece:
“What’s the point of opening if half of the population is going to stay away?“
“Where would our staff get another job?“
“How can you run any kind of financial modelling for the business when we don’t know what the perimeters are?”
“If a chef comes down with Covid 19 – do we then have to close?”
“Those that do come to the pub would have to be policed – would it be our job to ensure that they were complying?”
“Where can we get the funding we need, and can I maintain my staff on furlough?
“Will we be sustainable in the medium term say up to Christmas?
The hospitality sector is the country’s fourth biggest industry and supports one in ten jobs. It contributes £38 billion a year in taxes. More than 2.5 million staff have been furloughed and business owners have warned that many jobs could go if help from the government is not extended beyond the cut-off date which is currently next month.
So what is the picture in Oxfordshire and the future for our much – loved pubs, restaurants, bars and cafes? We spoke to the owners of some of the county’s favourite eateries about what happens next.
Claire Alexander of The Killingworth Castle and the Ebrington Arms says: “Boris’s announcement was a joke. It lacked any clarity or responsibility for the mess we find ourselves in. Thanks to the Government’s lack of action early on we are now all paying the most severe consequences – pubs can’t operate with social distancing.
“We should remain closed with support until next Spring because the Government has scared off our customers anyway. What’s the point of opening if half of the population is going to stay away?”
“Pub margins are small – to reopen means our overheads are up and running again and operating at 50% means many more in our trade will go bust without support.
“A lot of people are talking about rent due but there are a lot of us with mortgages also stacking up and all we’ve been given access to is the ability to borrow more money and get into more debt.
“It’s appalling that over 9000 pubs have received no grants when they are closed when many open businesses trading relatively well through this crisis have been given grants totally arbitrary. Ending furlough will simply mean ending more jobs if we can’t operate at near full capacity.
“The Government urgently needs to give closed pubs and restaurants access to the grant if they have not had it already. And they need to put pressure on the insurance companies to pay out. It’s an utter scandal how the insurance companies are behaving and we are having to launch an action against ours just to get them to communicate.
“The government has made the economy far worse by threatening a second outbreak while making businesses unsuitable for social distancing to open too early because they won’t give them the right support. It’s madness!”
Christopher Mulhall from Oxford’s The Plough at 38 also fears financial disaster could be on the cards for many.
“Pubs and restaurants by their very nature cannot enforce successful social distancing, not only are the logistics difficult, so too are the economics. I was expecting a detailed road map highlighting sector by sector opening.
“IT’S BETTER TO BE EITHER SHUT FULLY WHILE SOCIAL DISTANCING IS IN PLACE OR OPEN WHEN IT IS NOT, NO HALFWAY HOUSE, THIS WOULD BE FINANCIAL DISASTER.” CHRISTOPHER MULHALL FROM OXFORD’S THE PLOUGH AT 38
“Pubs and restaurants are not there to just provide us with a drink or a meal, they predominantly fulfil an experience. Social distancing will remove this part of the equation and income will be reduced while overheads remain the same.
“The upshot will be huge economic losses to businesses. It’s better to be either shut fully while social distancing is in place or open when it is not, no halfway house, this would be financial disaster. The economics of it will not work unless we can all mingle again.”
Rishi Sunak was today expected to announce a furlough extension for the hospitality industry to September. At a rate of 60% this will mean several of Christopher’s staff having to look for another job because this will reduce their hourly wage to £5.50 before tax, which is not sustainable for them.
He added: “The bad news is where would they get another job? Our overheads continue, and to open our water and electricity would go back to full payments. We would lose rent and some furlough suddenly, with perhaps 20% of normal sales coming in and yet we would be expected to pay 80% of normal outgoings. When our margins are only 10% when we are on full sales, you can see the economic nightmare we would face.”
Like many restaurant and pub bosses, Christopher’s main concern in the short term is business survival. “Where can we get the funding we need, and can I maintain my staff on furlough? Will we be sustainable in the medium term say up to Christmas? Will lockdown ease before September because if it does not, we along with many thousands of others will disappear. Then medium to long term, how do we weather the 30% GDP contraction, 9% unemployment and economic recession that will start when the second quarter is announced in July/August. Will this put an end to people’s ability to spend? If yes, then this along with social distancing will kill much of the industry.”
Christopher’s plea to the PM is simple: “If he is serious about the medium term lockdown, and pubs and restaurants are to remain shut please ensure that we are funded, ensure grants are extended, ensure policy is clear from treasury to banks and lending institutions as we, the 5.8 million SMEs that provide 50% of the GDP and 60% of employment to the UK will go under.”
Sarah Holt from The Mole Inn at Toot Baldon also feels it will be very difficult for the industry to reopen without much clearer instruction from the government in terms of what the implications and guidelines for social distancing will be and what the support package will be to support furloughed staff.
“There definitely needs to be more clarity and support to encourage customers And staff to feel safe and to allow us to reopen with enough notice and guidance to do things safely and with enough financial support”
“not knowing is very hard. being unable to make a sound financial plan and give staff security is extremely worrying” Sarah holt, the mole inn, toot baldon
Sarah added that it could be a real possibility to have to stay closed until everyone can return without any coronavirus social distancing and risks to consider.
“For us this could be a real possibility, it’s extremely difficult to plan for a scenario that is unknown in terms of the implications. How can you run any kind of financial modelling for the business when we don’t know what the perimeters are? Making informed decisions on whether it will be financially viable to open becomes very hard to predict.“
Financial concerns are paramount for many business owners, and Sarah is concerned about the level of government support. “For us the real worry will be what the government do next and how they will offer more support to hospitality specifically as we’re the last to reopen. The support already has, for us, not been enough and we need to know what they are going to do to help us reopen and support staff. Our main concerns are for the safety of the staff and customers, but also the not knowing is very hard, being unable to make a sound financial plan and give staff security is extremely worrying.
“Clarity and speaking to the industry directly is required if our much loved businesses are to survive.”
“I think that Boris needs to seriously consider the much longer term, rather than a VAT postponement. I think the VAT level for hospitality should be reconsidered overall to help business survive, potentially looking to models like France where VAT is only 5%. Rateable values also need reconsidering and help for small/medium sized businesses like ours who have missed out on the help of a a government grant need to be readdressed, otherwise we will lose many of our much loved eating and drinking establishments for good. Clarity and speaking to the industry directly is required of much loved businesses are to survive.”
Stacey and Jerome Prigent own and run The Horse and Groom in Caulcott.
“The nature of a pub is for people to socialise, but if they/we all have to wear masks and stay two metres apart, that will not be possible.” Stacey Prigent, Horse and Groom in Caulcott
Stacey said: “It’s really difficult to know what is the right thing to do; it seems that trying to open whilst complying with social distancing measures will be almost impossible. I hope that we will be given guidance on how to do that appropriately. The nature of a pub is for people to socialise, but if they/we all have to wear masks and stay two metres apart, that will not be possible. Those that do come to the pub would have to be policed – would it be our job to ensure that they were complying? That would put a strain on the good relationships that we have with our customers; people who are trying to support us.”
Stacey added that for now, running a pub takeaway is the only option for them.
“We can maintain social distance. Who knows where we’ll be in July? It’s just a wait and see situation. Hopefully, the government will continue to support businesses such as ours if the enforced closure needs to continue for longer. Jerome and I are in the very fortunate position of owning the business and building. We have a mortgage holiday and no staff, so it’s much easier for us to survive this storm financially than it is for others.”
Paul Welburn from The Oxford Kitchen, soon to be 215, is hoping for more direction. “So much still needs clarifying which needs to happen soon.
“Stopping furlough when customer confidence will be at its lowest will be catastrophic for us all” Paul Welburn, 215
“The fact that peoples’ safety is paramount does not help when we don’t have any real information. How people interpret this is the part that is of most concern. Until there is a clear plan, guidelines and financial strategy or realistic timescale, how can we logistically reopen any industry in a way that gives us all the chance to viably and safely rebuild?” he asks.
“Stopping furlough when customer confidence will be at its lowest will be catastrophic for us all. We need to have full support on the reopening, defined regulations for us to all follow to safely reopen – as an industry – telling us to open and just adhere to social distancing is not an option.
“We need financial support to continue the furlough of staff wages in a way that allows businesses to open and gradually ease the financial burden of opening with reduced revenues accounted for, be it reduced staff numbers required or customer confidence causing lack of trade.”
“It is going to be a very different world and tough, tough times ahead but we really need honesty, integrity and an understanding from the government about every industry’s needs.”
“We have been told to use common sense to nationally stop the spread of this virus, common sense needs to be used when implementing the industry’s plans.
“Social distancing is near impossible to execute and track whilst trying to gain customer confidence, this needs to be defined, clarified and confirmed before any changes to financial support are confirmed that includes continued, staggered or ending of any these essential support measures.
“It is going to be a very different world and tough, tough times ahead but we really need honesty, integrity and an understanding from the government about every industry’s needs. Each one is different and will require diverse measures, support and timescales to help in the reopening. This needs to be planned carefully.”
Bryn Jones from The Oxford Arms in Kirtlington says it would be better to stay closed until everyone can return safely. Like many pubs, he has started a takeaway service: “It is not possible to reopen until the social distancing rule ends because of the safety of ourselves, our staff and the customers, and also because of the associated high costs including high rent when the capacity could be as low as 20%. Without full rent concession and the government’s further help including grants and furlough scheme while we are closed and during the rebuilding phase, a large part of the hospitality business will not reopen.
“Our main concern is we may not open fully until the end of the year or even later. In that case our biggest concern is the accumulation of rent debt. The only way for all pubs and restaurants to survive is to cancel 100 per cent of our rent, not defer or postpone, for nine months to a year while the trade is rebuilt.”
Kay Chandler from The White Hart at Fyfield is concerned that the PM’s message held little clarity. She said: “The guidelines are so vague with no definite dates – the government hopes that restaurants will reopen in July but we are concerned that we spend huge amounts of time, marketing and money to reopen and relaunch on July 4 and then the date is postponed.
“what if one chef comes down with Covid 19 – do we then have to close? These are huge unknowns which could have catastrophic consequences for our business. It is like going down a dark alleyway blindfolded!!” Kay chandler, White Hart fyfield
“What happens to the staff/wages if this is the case? We just want to do the right thing by our customers, our staff and our business. We have a duty of care and we need clear guidelines to be safe. For example, what if one chef comes down with Covid 19 – do we then have to close? These are huge unknowns which could have catastrophic consequences for our business. It is like going down a dark alleyway blindfolded!! We have so many questions.”
Kay added that in an ideal world they would stay closed, but with no rent break they need to start making some money: “Even though we are closed, we are still accruing rent. We could not go on another six months paying rent with no income – we would lose the business we have worked so many years for and would probably lose our home too. I don’t think the government could afford to subsidise this for such a prolonged period either in terms of furloughing staff or the loss of VAT receipts.”
In common with many business owners, Kay’s main concern is the complete uncertainty of trading conditions when pubs reopen. “We have lots of loyal wonderful customers, but will we have enough custom to reopen and just be socially distanced. Will we need to supplement this with takeaway, produce boxes, or cook at home meals? Running a restaurant service and doing takeaway involves huge pressure on the kitchen team in a short space of time because everyone wants to eat at 7:30/8pm in a very small kitchen where we will need to ensure social distancing!
“Another concern is capacity – we can make sure tables are 2m apart but guests may need to walk from their table to the toilet and this cannot be done at a two metre distance! There is also a huge concern as to how we protect our team of staff – can we afford to keep all of our staff on? At the moment, we have no idea, how much revenue we will take, so cash flows and predictions are nearly impossible. I would like some clearer guidance from Boris.”