New Figures Reveal How Hard the Restaurant Industry Has Been Hit by COVID-19

New figures released today by the Office for National Statistics (ONS) reveal the economic impact of the COVID-19 pandemic on the U.K. economy: Analysis shows that the economy shrunk by 2 percent in the first quarter of 2020 — which takes into account only two weeks of the period in which full lockdown measures were put in place. The hospitality sector, by contrast saw a first quarter decline in sales of 21.3 percent, according to research published last week by the industry’s principal trade body, UK Hospitality.

UK Hospitality says the figures illustrate plainly how restaurants, pubs, bars, and cafes have taken an “unprecedented and hugely disproportionate hit,” and why the industry must continue to remain a special case for government support — through wage subsidies, rent controls, support on insurance, and a full plan for a safe and phased reopening across the whole sector. The trade body is forecasting significant second and third quarter declines compared with 2019; a predicted upturn by December only expected to reach 69 percent of last year’s trade.

Chief executive of UK Hospitality, Kate Nicholls said: “This shines a light on the dire and unique position in which our sector has been placed. Ours was the first to take a hit, took the hardest hit, and will take longer than most to recover.” She added that although declining sales in other sectors were alarming, they were “incidental” compared to the “hammering” hospitality business, like restaurants across London, had taken.

The overall impact on the economy has been similarly significant, with GDP declining by 5.8 percent in March alone putting Britain at the very start of an economic downturn on a par with 2008 global financial crash. That figure of almost 6 percent coms close in a single month to the entire loss of output during the 2008-09 recession, according to the Guardian.

“The economy’s 5.8 percent decline in March alone will have been similarly dwarfed by hospitality’s misfortune, as lockdown and forced closures came into force, stopping trade for most venues altogether,” Nicholls said.

“Hospitality needs additional support to ensure that swathes of businesses do no fail altogether and to avoid millions of jobs being lost. We need continued and flexible support on furlough, rents and insurance, so that businesses can plan ahead, save livelihoods and help to drive economic recovery,” she added.

Yesterday, chancellor Rishi Sunak announced an extension of the furlough scheme until the end of October, which provides some medium-term breathing room for restaurants. But the industry at large says it needs government subsidies for its workers until the end of the year at least, given the likely inability of restaurants or business that rely on “crowded venues”, per the government’s latest guidance, to reopen fully before then. It also needs the scheme to become more flexible, so that part-reopenings can enable some workers to return on a part-time basis, without disqualifying them from continued government subsidy.

The big remaining area of relief is rents, with many hospitality advocates certain that a 9-month moratorium is the only way to guarantee the future of the industry. So far, the government, which has not wanted to interfere heavily in landlord-tenant relations, has not been forthcoming on long-term rent cancellations or deferrals.

• Chancellor Rishi Sunak Extends Coronavirus Job Retention Scheme Until October [ELDN]
• The U.K. Government Needs to Protect Restaurant Workers ‘Until End of 2020’ [ELDN]
• July Opening Date for ‘Some’ Restaurants Means Almost Nothing to Most Restaurants [ELDN]
• Restaurant Industry Asks Government for 9-Month Rent Holiday to Stay Afloat [ELDN]
• Hospitality Industry Wants Government Support Until Business Back to ‘Full Strength’ [ELDN]
• Social Distancing Until End of Year ‘Catastrophic’ for Restaurants [ELDN]
• Restaurants Need a Phased Reopening Plan to Avoid Devastating ‘Yo-Yo’ Effect [ELDN]