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Securing a rent break key concern for hospitality

Published:  01 May, 2020

Securing a time out on rent has come out as a key priority for Britain’s pubs, bars and restaurants as cashflow concerns top their agendas. 

Business confidence in the eating and drinking out sector has plummeted, with only 5% of bosses currently confident about future prospects, with rent payments and landlord agreements being their biggest concerns, according to the latest Business Confidence Survey from CGA and Fourth. 

The survey of over 120 senior executives and entrepreneurs, which was conducted during the week beginning 20 April, revealed that 89% of operators support some sort of rent break, with an initial nine-month period the most popular option, backed by 39%, with another 23% preferring a year-long option

Rent payments and landlord agreements were picked out by 40% of business leaders as the greatest challenge faced currently, with a further 27% seeing them as a “major challenge”. 

Together they topped the list of business challenges, with access to loans the next big worry - with 17% seeing that as the biggest challenge and 37% a major issue. Banking relations, investor support and payments to furloughed staff were down the list.

However, there were differences in the rent outcomes bosses were preparing for. While 28% were looking for a rent-free period and extended lease, 26% were looking to a deferral, with another 20% expecting part payment in negotiation with landlords 

But when asked the question of what would be the best next measure the Government could introduce to support their business, 70% went for a nine-month rent free period to December, ahead of universal business interruption insurance (favoured by 17%) or removal of the £51,000 rateable value threshold for grants (13%).

Just 27% of businesses had any sites open and almost all had furloughed staff, with the vast majority not topping up wages.

Although immediate survival is the top priority, many operators are tentatively developing recovery plans, but with predictions of a return to a vastly different and contracted market compared with pre-Covid times, the survey found. 

It said that market optimism had plummeted from a four-year high in February, when 60% of bosses were positive about future prospects to just 5% now, with 89% pessimistic. 

Confidence in their own business was slightly higher, with 15% being optimistic, which marked a fall from 83% in February and 31% in March. Now 69% are pessimistic about their own company’s future.

 At the beginning of this week, new research by UK Hospitality highlighted flaws in the level of support provided to businesses during the Covid-19 crisis.