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Restaurants Need a Phased Reopening Plan to Avoid Devastating ‘Yo-Yo Effect’

Hospitality trade body sets out six-point plan for the government to avoid the loss of one million jobs

The Michelin-starred Clove Club in Shoreditch, London, closed because of COVID-19 Michaël Protin/Eater London

The U.K. hospitality industry has doubled-down on its plea for additional support and a long-term plan in the wake of Chief Medical Officer Chris Whitty’s announcement yesterday evening that some social distancing measures would be in place until the end of the year, or until an effective vaccine against COVID-19 had been made available.

In a letter to senior cabinet minster Michael Gove, who over the weekend said pubs and restaurants would be among the last to come out of lockdown, Kate Nicholls, chief executive of trade body UK Hospitality reiterated many of the remarks she made to the Treasury Select Committee earlier this week. She said reopening the hospitality sector without a plan would be catastrophic. That plan should include a “phased approach” to avoid the “yo-yo effect” of openings and closings. Such a situation, the letter argues, could result in numerous failed businesses and the loss of one million jobs.

“If the correct support is not in made available to help businesses get back to work when the time is right, then businesses will have survived the immediate crisis only to find themselves out of business during the aftermath,” Nicholls said.

The overarching concern from within the industry, as outlined in Nicholls’ letter, is that periodic lockdowns and various means of long-term social distancing will cripple the hospitality sector; it will also affect different (sized) businesses at different times in the coming months. Because of that, Nicholls wants a far-reaching plan for a “phased opening” for the sector.

She said that those capable of adhering to social distancing while open should be able to operate. But, added, “for the many venues where it is not possible, support, such as the furlough scheme, must be extended to make sure these businesses stay alive and jobs kept open.

“We can’t have a situation where, overnight, the entire sector is suddenly expected to hit the ground running.”

To avoid a “catastrophic” situation for restaurants, pubs, and the wider leisure industries, UK Hospitality recommends a six-point plan to the government: It includes, firstly, an extension of the furlough scheme beyond the end of June for hospitality (yesterday, the trade body told Eater that it would not put a fixed term on this recommendation, but that it should be “until businesses are up and running fully.”)

It recommends “legislative intervention on rent payments” — the widely supported and thought-to be critical plan for an extension to the eviction moratorium. This echoes the call from the parallel lobby, Hospitality Union, which this week asked Chancellor Rishi Sunak for a “National Time Out” which included a nine-month rent holiday for the sector.

The third element of the plan is “improved access to capital,” calling on the government to make it easier for businesses to borrow money from banks. To date, the industry has been widely unsuccessful in applying for special loans created to support businesses impacted by COVID-19.

The plan also requests a “comprehensive fiscal package to stimulate demand post-crisis.” This includes modifications or the suspension to tax liabilities for business and, as was announced last week by a cross-party parliamentary group representing hospitality and tourism, national marketing initiatives to support the reopening of restaurants and incentivise visits to them.

The plan also wants to see “an overhaul of business regulation.” This includes one of the biggest financial burdens for restaurants before the coronavirus crisis. Businesses have long criticised the expensive and unsustainable rates they are obligated to pay in relation to the value of their property. Business rates have been suspended for a year to help businesses in the short- and medium-term, but the sense is that any meaningful long-term recovery will need those kinds of obligations revised through legislation.

Lastly, it calls for the guarantee of a “functioning and responsive” insurance market, which, given the precarious nature and susceptibility to rapid and unforeseen business interruptions, can sometimes look upon the hospitality sector with scepticism.

The industry is awaiting a response from the government and hopes to receive an update or announcement by next week.