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Quarter of licensed premises remain closed as ‘rule of six’ rolls out nationwide

Published:  14 September, 2020

Nearly a quarter of Britain’s licensed premises were still to reopen at the end of August, with the London market particularly slow to recover, new data has shown.

The latest figures from the Market Recovery Monitor from CGA and AlixPartners show a continued slowdown down in the market in terms of reopenings, even with schemes like Eat Out to Help Out (EOHO) giving venues a boost.

According to the data, just over three quarters (76.3%) of sites have returned to trading since the on-trade was given permission to open in early July. This is an increase of more than 14 percentage points on the end of July (61.7%).

However, a total of just under 27,000 licensed premises have not yet opened their doors.

The data comes alongside a snap poll from CGA which showed that the ban in England on meetings of more than six people from today, Monday 14 September, has left nearly a third (31%) feeling less confident about visiting pubs, bars and restaurants. Just 4% said the new measures had lifted their confidence.

The dip in consumer confidence is likely to hit the sector hard just when it was beginning to get back on its feet.

CGA’s Consumer Pulse survey, which collated consumer confidence levels via a snap poll at the end of last week, found that over half (59%) of consumers who were intending to go out had cancelled plans or would not be making new ones in the future.

“This research really highlights the fragility of consumer confidence at the moment,” said Hannah Payne, consumer research manager at CGA.

“The new restrictions come just as restaurants and pubs were enjoying strong momentum from the Eat Out to Help Out scheme, and they are a warning if that were needed the road back to normality in the out-of-home sector is going to be very bumpy.

“Many consumers will now be cancelling or changing their plans, and the restrictions increase the pressure on operators to show guests that they can eat and drink out safely. Understanding their anxieties and demonstrating rigorous precautions without compromising the experience of going out for a meal or drinks will be absolutely crucial over the autumn.”

In terms of re-openings, the pace of recovery has varied significantly by venue type. Pubs have been quicker to return after the end of lockdown than restaurants, with 94% of food pubs and 89.4% of community pubs trading by the end of August.

Casual dining restaurants have been slower to return, though the EOHO scheme and VAT cut incentivised many to reopen during August. More than four in five (83.8%) are now trading, up by 20 percentage points on July.

“After the sector’s toughest ever spring and early summer, it’s pleasing to see more than 15,500 venues reopened over August, but [also] concerning that nearly one in four licensed premises are still shut,” said Karl Chessell, business unit director for food and retail at CGA.

“The Eat Out to Help Out scheme and VAT cut had the desired effects of encouraging more operators to reopen and stimulate trade, and there was some pleasing progress for the casual dining restaurant sector. However, new restrictions on gatherings, slow London footfall and the risk of local lockdowns all give cause for caution as we move into the autumn. August showed us that the sector can recover well with the backing of government and consumers, but it is clear that support needs to be sustained for some time to come.”

AlixPartners managing director Graeme Smith added: “Bolstering consumer confidence has been critical to kick-starting the rebuilding of the hospitality sector, as well as the wider economy. In that regard, the government’s Eat Out to Help Out scheme and reduction in VAT prompted operators to reopen more of their venues sooner than they might have and benefit from the positive impact of robust August trading.

“However, with the scheme now finished, the next rent quarter falling due at the end of September, the end of the lease forfeiture and debt enforcement moratorium fast approaching, plus further employer contributions to furlough due, major challenges remain.”

The government’s restriction of gatherings to six people presents a further challenge to operators, Smith said. This will have particular significance for businesses that rely on larger groups gathering socially in such outlets as wet-led and late night venues, creating additional headwinds.

“The next few weeks will prove critical and start to highlight those businesses strong enough to ride out the storm.”