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All change: dining out post-lockdown

Published:  12 May, 2020

As the UK’s attention moves to how lockdown restrictions will ease, Chris Losh ponders the future new normal when it comes to the on-trade.

Last week I read a piece on the US Eater website about life in a semi-unlocked down Hong Kong. I’d hoped it would make me feel optimistic.

But the picture it painted of a world of face masks, temperature checks, contact information at reception desks and tables in acres of space was hardly reassuring. There was more atmosphere on the moon.

The same week Austria and New Zealand both announced tentative relaxation of their lockdown arrangements and more than 70,000 Italian bar and restaurant owners turned on their lights in protest at the damage being done to their businesses.

Welcome to the new normal. A world of faint hope and looming fear, of anger and uncertainty – particularly for the on-trade.

At the time of writing we’re uncertain as to quite how we’re coming out of lockdown in the UK, and by what degrees, but it now seems certain that hospitality will be the last out of the traps.

Given the glacial pace of containing the virus so far, it’s not unreasonable to think that the on-trade could still be kicking its heels well into the autumn. And even with the news that the government has increased the furlough scheme beyond June to October, that would be too long for many venues.

“The vast majority of businesses can do three to six months [of closure],” says Nik Darlington of Graft Wine. “But if it gets to 12 months businesses will not reopen. The longer you put entire sectors into hibernation, the less chance there is that anyone will wake up again at the end of it.”

The problem, of course, is that even when the ban on going out (to eat in) is finally lifted, it will come - as in Hong Kong - with some fairly major strings attached.

Banning standing at the bar and halving the number of tables in a restaurant might address contagion concerns, but they aren’t going to do much for the viability of a business.

Most venues already work on the slimmest of margins as it is, so halving their potential revenue will simply push them from “knife-edge” to “unsustainable”.

“What a lot of people don’t understand is that even a 5% drop in trade can make the difference between a successful business and one that is in trouble,” says co-owner of Vinoteca, Charlie Young.

“When you’re talking about a 40, 50, 60% drop, how are people going to survive?”

Even these depressing predictions of double-digit under-performance assume that the new reduced number of venues will be full. But of course that’s far from a given.

“Even if you look at countries where there has been a lifting of lockdown, the restaurants haven’t been doing the business they anticipated because customers are worried and confidence is low,” says Luke Wilson of 10 Greek Street.

Stephen Finch of Vagabond Wines, which was thriving pre-Covid 19, is equally pragmatic. “We have to assume the worst,” he says. “Once the lockdown is lifted, for two maybe three months it’s going to be tough – people just aren’t going to go out, and we’re probably not going to have the benefit of government support at that point either.”

This, perhaps, would be the worst-case scenario for the on-trade: one of the business sectors officially being permitted to open, but within parameters that make profitability impossible and with government support withdrawn.

With rent a major outgoing, most businesses are working with their landlords to try and find a solution. Young suggests a “turnover rent of, say, 8-10% so venues don’t all go bust and the landlord isn’t left with an empty property.”

Hospitality guru Jonathan Downey, meanwhile, has been pushing for a government-sanctioned rent holiday. Under his National Time Out proposal, landlords would not collect rent until January 2021 and governments would force banks to freeze mortgage payments over the same period.

It’s a scenario with few short-term losers that would give thousands of on-trade businesses some much-needed breathing space.

“So many in our sector will need something extraordinary to get through the next few months and to make it worthwhile to carry on after,” says Downey.

“I don’t know if we’ll get this but it won’t cost government anything and nobody has come up with a better plan yet to help more businesses.”

Broadening horizons

One of the interesting elements of any crisis is the way in which it can encourage (or force) businesses to shift into new areas, and Covid-19 has been no different. Not all on-trade businesses have been able – or willing – to pivot, but plenty have.

From wine bars offering home delivery to restaurants selling click-and-collect patisserie, there’s been no shortage of innovation. It might not be making anyone rich, but it is, at least, keeping some of the lights on, enhancing relationships with existing customers – and even finding new ones.

The question is whether restaurants will want to keep performing their new tricks in a post-pandemic world or whether they will drop them quicker than a stranger’s handkerchief.

Christine Parkinson, former head of drinks for the Hakkasan Group, thinks it will be the former. Restaurants, she argues, will need to look at two key areas: how they use their premises and how they staff them – and neither area might look like it did before.

Dark kitchens – making food off-site and delivering it – were already a growing trend pre-Covid-19. The crisis has seen many venues that hadn’t considered them before now using them. Even if only a third of these neophytes continue to prepare food elsewhere, Parkinson thinks this is an area that’s only likely to grow.

She says: “Restaurants have to cram people in to survive. They’re going to be doing the sums [on social distancing] and working out that one revenue stream is not going to be enough. People will hedge their bets and do both hospitality and deliveries.”

It helps, too, for embryonic delivery businesses, that eating at home will be considered “safer” than eating out – at least for a while.

Staffing solutions

As for staffing – this was a huge issue before Covid-19 appeared on the scene and is likely to remain so.

There may well be fewer restaurants post-lockdown but, equally, there is no guarantee that one-time front-of-house staff will be keen to resume travelling into city centres to work in busy environments for low pay.

A combination of staff shortages, plus government directives on person-to-person contact and customer unease are going to drive a search for alternatives, such as iPad menus and touchscreen ordering.

Down the line, Parkinson envisages a two-tiered system, with extreme (expensive) specialism at one end, and tech taking the strain at the less-specialised end.

“Being served by a human will be an expensive luxury – and if people are going to pay a premium for it, that person had better be really good!” she says.

In “ordinary” restaurants, the wine lists will get smaller.

While the lockdown might be the catalyst for these changes in the medium term it would be long-term pressures on staffing and costs that ensure they remain in place long after Covid-19 has been brought under control.

Though for every person who can see an increasingly digitised or automated future – one even mentioned robots delivering plates – there are probably two or three others who are sceptical.

“I get the logic behind it,” says Vinoteca’s Young, “but I’m not convinced. I think having been locked down it won’t take people long to remember that they just love interaction.

“Ordering on iPads might work in a fast-food outlet, but I don’t think it does in a restaurant.”