Michael Gove, Cabinet Office Minister, yesterday (Sunday 19th April) confirmed pubs, restaurants and hotels will be among the last to reopen when the coronavirus lockdown is relaxed. During an interview with Andrew Marr, when asked on whether they could reopen before the winter, Gove replied: “Areas of hospitality will be among the last to exit the lockdown, yes that is true.”
There were some theories that leisure and hospitality, along with the construction industry could be some of the first businesses to return to work due to the ‘Multiplier Effect’. This is the impact and ripple effect these industries have on other sectors, therefore, helping to springboard the economy back into life. Businesses in leisure and hospitality would impact wholesalers, growers, farmers, food producers, logistics businesses and many more. However, Mr Gove has put a clear halt on that theory and all leisure and hospitality businesses should prepare to be the last to get back to work.
Alex Demetriou, Managing Director of Regency Purchasing Group - one of the largest procurement businesses in the UK - commented: “Gove has confirmed that leisure and hospitality will be among the last to reopen, which is a further blow to the industry, although we clearly all understand preservation of life has to be the priority. That said, for many seasonal businesses, this could mean that they will not open again until next year.
“We have already received confirmation from two Regency members that they will not be opening this year and are making plans to open in March 2021. At Regency, we own and operate several coastal businesses and we know we must make money in the spring and summer to get through the winter season, where we make losses in most months. Without the profits from the busy spring and summer period, we could not sustain the winter and therefore, closing until March 2021 may be a possibility, and the only viable option, for many more businesses in the sector.
“The number of businesses that choose not to reopen for the winter period will have a negative knock-on effect to the economy, with tax contributions such as VAT, alcohol duty, PAYE and National Insurance all reduced, thus adversely affecting the UK’s economy ability to bounce back. Indeed, further damage could be done for those that do try to get through the winter and end up having to close permanently, because they were not able to survive those quieter months.
“Beyond this, the businesses that choose not to re-open until next year will inevitably let staff go once the furlough period is over, so we can expect to see higher levels of unemployment that could be concentrated around the coastal towns of the UK.
“We are in challenging times right now and looking head, the one thing that operators cannot yet predict is the behaviour of customers once lockdown is lifted. We will be living in a new world and as yet, no one knows whether it will be better or worse. Just because a business was successful before the pandemic, does not guarantee the same business model will be as good afterwards, while others that were doing good enough, may thrive following a change in behaviour.
“It is clear from surveys already undertaken that different age groups intend to behave differently once this lockdown is over. The younger and less vulnerable want to get back to normal life and intend to re-visit bars and restaurants as they did previously, whereas the elderly are stating they will be more cautious. Again, going back to the coastal community, away from school holiday periods, they are heavily reliant on the older demographic day visitors for trade. If they choose not to come out, it could be another hit.
“We, at Regency, have brought these factors to the attention of government ministers. Of course, their priority is the NHS and they have a number of sectors to look after and consider, so we cannot expect this to be their priority. Nor indeed would we want them to get restaurants and leisure businesses opened sooner at the risk of public health, but there may be more support needed to help businesses that find themselves in this position.
“This really is on a knife edge in terms of timing; we will have to see how the next few weeks play out and hope that the public have all stayed home and done enough to bring the pandemic to a manageable state.”
Regency Purchasing Group services more than 3,000 businesses across the UK and specialises in sourcing produce from various markets, locally, regionally, nationally and internationally.