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Friday Read: The post-pandemic hangover for hospitality

Published:  12 August, 2022

Nick Gillett, MD at specialist spirits company Mangrove UK, talks challenges and opportunities for the still beleaguered on-trade.

“It’s good to be getting back to normal” – how many times have we heard that said over recent months. A glib, throwaway line meant to reassure us that we’re over the worst, that we can all breathe easy (literally now most of us aren’t wearing the dreaded masks anymore) and go about our business. The fundamental problem is that I think life is still anything but normal. Especially if you’re in the hospitality industry. And I get it, really I do – in terms of the horrors of loved ones contracting Covid-19 and its devastating medical impact, we are now getting back to normal, but the hospitality industry will be reeling from the pandemic for years to come.

The pandemic was multifaceted, affecting businesses differently depending upon where you were located – at worst, you were shut completely, at best trading was significantly reduced, with social distancing dramatically cutting capacity. Whilst assistance was available, there have been very few winners at all from the industry. We crossed our fingers, looking forward to a post-pandemic boom time when people would be back out drinking locally, treating themselves to a summer-staycation, eating out to help out and creating up-market serves in their gardens.

But hospitality has experienced its own ‘long-Covid’ hangover, as deferred debts and borrowing started to need repaying against a backdrop of reduced capacity, staff shortages, home working and rising supply costs. And that’s once you’ve got your liquids and foodstuffs into the country – regular port shutdowns, production issues, shipping costs and the gob-smacking time it takes for regulatory approvals all add up to a very poor operating environment. Factor in a UK wide cost-of-living crisis which threatens to cripple many (or, at the very least, will see most of us breaking the tap-and-go spending habit as we clamp down on household spending), and the hospitality industry is still very fragile.

    • Read More: Red alert for hospitality as the cost of living heats up

Of course, location plays a part in how businesses are doing: the centre of London is well down on both tourist numbers and city workers, even when the trains aren’t on strike – and the slack hasn’t yet been picked up by another cohort; in contrast some towns and restaurants in commuter-ville are faring better as they benefit from higher numbers of customers, building on the period when no-one was working in offices and local restaurants were in big demand as a reason to get out of the house.

During the pandemic, the off-trade and ecommerce stormed ahead of the on-trade, despite innovative bar owners morphing into home delivery entrepreneurs striving to keep connected with their local customers. Those numbers are tailing off now and the off-trade is seeing a lessening of demand as the on-trade comes back out to play, albeit grappling with a range of new challenges.

Change is definitely in the wind. Hospitality still offers great experiences and there are some tremendous operators out there, but there are fewer independents rushing into the sector and a wariness and unease pervades.

That said, we’re seeing the rise of good operators with different concepts, who are looking strong – green shoots after a very, very severe pruning: emerging successfully are destination venues that are combining hospitality and leisure pursuits, such as Red Engine’s Flight Club or Loungers to name but two. And if you’re cash rich, there are opportunities to acquire sites at very competitive rates, and I suspect we’ll see many more distressed sales in the coming months as operators go to the wall through no fault of their own.

There is still good business to be had, and volume is still there, so if you’ve got access to stock and can support supply, you can do very well if you’ve got the right business model. In my view (and it’s a challenge), operators still need to offer value for money in terms of the experience they offer – focus on delivering quality and an experience different from your competitors; look outside of your traditional relationships and partnerships, to find interesting products and brand activations that can bring people through the door. If you’re struggling with staff shortages, impacting your ability to maximise customer orders on a daily basis, consider less time sensitive serves, like pre-batch cocktails.

Whilst Mangrove isn't front line hospitality and our multichannel coverage insulates us from some of the worst effects, we can see the challenges experienced by our on-trade customers. I took decisions during the pandemic to invest in systems and headcount and worked with our brand and logistics partners to try to be as flexible and efficient as possible; we are currently seeing the positive results from this and adapting to the current challenges and like our customers we are focused on delivering award winning service with one of the most innovative and interesting portfolios. I continue to believe in the health of the on-trade and the creativity of the great operators, but it would be nice if the blows stop raining down on them for a while.