Trade confidence in free fall amongst pub operators

As we enter the thirteenth week since the pubs were closed due to Coronavirus, a recent survey conducted by UKHospitality reveals that many pub operators are feeling despondent about the future trade at their sites.

Respondents were asked to give their expectations for trade in the three months following reopening, and also in the crucial December month. They were also asked about the difference in impact between a two metre and one metre social distancing rule.

The results reveal that overwhelmingly operators expect a very slow recovery in the second half of 2020, with a worse case scenario of a third of last years’ trade in December with a two metre social distancing rule in place.

At one metre the impact is still severe, with trade expected at just over half of last years’ level. In the short-term the outlook is very gloomy indeed, with trade expectations in August at between a 78% and 65% decline depending on the social distancing restrictions.

Expected government announcement

The government is set to announce their new measures this week, which should pave the way for pubs and hospitality businesses to reopen.

Following the recent downgrading of the Coronavirus risk level from 4 to 3, this paves the way for the government to announce a reopening date – widely expected to be 4th July for pubs.

There is an expectation that the social distancing requirement will be reduced from 2 metres to 1 metre, which would allow pubs to reopen with an average capacity of around 60-70%.

However it might also be necessary for people to register to visit pubs and restaurants. Matt Hancock said he “wouldn’t rule out” the need in a recent interview with Sky News. He added “That is the sort of thing we are looking at for how do you make it safe to open things.” It is thought this would also make it easier to track people in the case of an outbreak.

Rent headache

With the widely expected drop in trade, and slow recovery period – the issue of rental is not going away any time soon.

The government last week extended the lease forfeiture moratorium until the end of September, which was met with a collective sigh of relief from many tenants. However the voluntary rent code was met with disappointment, as landlords can simply choose to ignore it.

The code, which was endorsed by UKHospitality, sets out some parameters that tenants can use to negotiate rental concessions with their landlords.

After intense lobbying, we are pleased to have secured 3 more months of tenant protection from landlord debt enforcement actions as part of a package including a voluntary Code to help guide rent negotiations. More must be done but this is a start! https://t.co/XVhyQc9m8I

— Kate Nicholls (@UKHospKate) June 19, 2020

UKHospitality acknowledge that more must be done, not least to protect tenants if landlords simply choose to ignore the code. This further highlights the importance for tenant representation to ensure fairness – as otherwise for many pub tenants there will be no way back.