Hospitality Industry Wants Government Support Until Business ‘Back to Full Strength’

The chief executive of the U.K.’s principal trade representative for the hospitality industry has said that government support for restaurants and bars impacted by COVID-19 must be improved, extended, and delivered quickly in order for those businesses to recover from the crisis and to save jobs.

Kate Nicholls, of UK Hospitality, gave evidence to the House of Commons Treasury Committee in London yesterday and outlined five key areas in which she hoped the government would address problems being faced by businesses. She also put forward proposals for new measures within those key areas.

Though government support had been “swift” in helping businesses to get over the initial shock of the crisis, its overall efficacy was diminished, “with many businesses struggling to access support and others excluded from schemes,” Nicholls said. She also stressed the need for government intervention to “continue past the end of the lockdown” in order to give hospitality businesses a meaningful chance of recovery.

“Even when lockdown measures are lifted, our sector faces a huge challenge in getting customers back through their doors and finding solutions to social distancing measures that are likely to be in place,” she said, echoing an increasing realisation within the industry that there will be no swift return to pre-COVID-19 normal for anyone in hospitality.

Nicholls summarised the severity of the situation thus: “Hospitality is going to be battling with the effects of this for months, if not years and support from the Government cannot be stopped until businesses are back up to full strength.”

The five areas identified by Nicholls yesterday were rent, employee retention, grants, loans, and insurance:

Rents
Nicholls reiterated the industry’s plea — made by Yotam Ottolenghi and numerous others — for an extension to the rent holiday, emphasising that serious damage to the sector was expected when rents are next due if there is no extension to the current moratorium (at the end of June.) She went short of citing the nine-month term outlined in yesterday’s proposal from Hospitality Union, which is backed by the chief executives of Dishoom, JKS Restaurants, Caravan, Burger King, Nando’s, and others. But the message across the industry is clear: without an extension to the rent holiday, many restaurants will be forced to close permanently.

“The sector has confidence it can return to near full strength if it is supported on rents,” the trade body said.

Furlough and Job Retention Scheme
Despite an extension to the Coronavirus Job Retention Scheme (CJRS) to the end of June, which was announced by Chancellor Rishi Sunak last Friday, “an estimated 350,000 hospitality workers are missing out as they are seasonal workers or hit by technicalities,” the body said. Those most impacted by ineligibility criteria include new starters (the scheme was originally backdated to 1 March but later extended to include those starting between 28 February and 19 March) and those unable to produce an employee payslip.

UK Hospitality told Eater that has not yet set a fixed date for when it would hope to see the CJRS extended. Instead, it says, it would welcome an extension “until businesses are up and running fully.”

Grants Scheme
The business grant scheme — administered through councils and local authorities — issues payments to businesses according to their premises’s rateable value (capped at £51,000). It is being done so with differing levels of efficiency for restaurants in London.

The government told Eater that it was continuing to support and encourage local authorities to process applications as quickly as possible, and cited data from 20 April which reports that £6.11 billion has been paid out to 491,725 business properties, almost 50 percent of the £12.3 billion allocated.

Aside from those administrative issues, UK Hospitality raises the point that bigger businesses have been offered no such lifeline: 71 percent of hospitality business — large pubs, for instance — is carried out in a venue with a rateable value of above £51,000 and is therefore ineligible for a grant. “Scrapping thresholds for grants and support with rents will keep businesses alive and keep jobs open,” Nicholls said.

Loan Schemes
Nicholls said that businesses have been frustrated by the Coronavirus Business Interruption Loan Scheme (CBILS), in which the government guarantees special bank loans to businesses. Problems with this scheme have been highlighted since the beginning of April. Yesterday, Nicholls cited a survey of UK Hospitality members which showed that of the 50 percent of businesses which had applied for a loan, only 18 percent had secured one. Over half (58 percent) of applicants were still waiting for a response.

Significantly, the body added that some banks — wary of the long-term impact on the industry — had indicated they will not lend to hospitality businesses at all. The body told Eater that it had “heard anecdotally of several such instances but not around one specific bank in particular.” Eater understands from multiple restaurant operators that many are simply not even attempting the process having understood the negative experiences of others.

Insurance
Of the UK Hospitality members who had attempted to claim insurance against mandated closure, 71 percent had claims rejected. Bolt-on coverage which would allow businesses to make a successful claim was too expensive for many.

In response to questions on whether or not the government was considering amending any of the proposals as laid out by the hospitality industry, a spokesperson told Eater: “The Government has put in place a far-reaching package of support for businesses, including grants and government-backed loans, as well as legislation to ensure tenants are protected from eviction if unable to pay their rent.

“In these exceptional times, we urge landlords to act in a responsible way, exercising judgement and discretion with their tenants.”

Asked what level of optimism there was within the industry on whether any of these concerns will be heard or actioned upon, a spokesperson for UK Hospitality told Eater that they “understand Government is continually monitoring the schemes and has already made changes based on industry feedback. We are hopeful that more changes will be made.”

More soon.