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Fri 13th Mar 2020 - Coronavirus update: Downey, McVeigh, Urban, footfall, New York, Grubhub
Sector urges government to follow Germany's lead with unlimited business loans: Sector bosses have urged the government to follow Germany's lead and offer unlimited free loans to businesses to help steer the sector through the coronavirus (covid-19) pandemic. London Union founder Jonathan Downey told Propel without more support the hospitality industry would see “masses” of businesses go bust with a lockdown of the country being “inevitable”. Germany's finance minister Olaf Scholz has said there was no “upper limit” to the loans, which would be made available through Germany's state-owned bank KfW. Downey said the British government needed to adopt a similar approach given its current offer of help, including abolishing business rates for those with a rateable value of less than £51,000, was “nowhere near enough”. “Make no mistake, this is a catastrophe for the industry and I hope the move by Germany will pressure the government to do the same,” said Downey. “If it does it completely changes the landscape for the industry – it would mean we could ride it out for three months and continue to pay staff.” He added: “At the moment the government is having to make some difficult decisions about the value of human life and that of the economy. You look at what has happened elsewhere and is inevitable we will go into lockdown. The terrifying thing is when we do we don't know how long it will last – but the government can help save the industry by acting now.” Downey said revenue at its Dinerama street food market was down 35% yesterday (Thursday, 12 March) and said venues in the cities and suburbs were being hit the hardest as people stayed away. Charlie McVeigh, chairman of The Breakfast Club, said: “I assume the main threat for landlords is from the bank – this will need government action to alleviate. It makes sense given the impact of a thousand landlords needing a bailout is way less than the entire hospitality industry. It's almost impossible to imagine how else this economic apocalypse can be avoided. It must be easier for the government to deal with the lending banks that can then help each of their landlord customers in turn, as required. Rather than trying to somehow provide help piecemeal to a huge range of different retail and hospitality operators. There is no time for that. The alternative is presumably unthinkable for the economy.”
High-street footfall continues to drop: High-street footfall has continued to drop across the UK in the wake of the coronavirus (covid-19) outbreak according to the latest data from Wi-Fi solutions provider Wireless Social. Its analysis has taken an aggregated look at footfall in more than 800 venues nationally, focusing mainly on major cities. Wireless Social said over the past seven days there has been a 20% drop in footfall compared with the same period last year. The data revealed footfall in Birmingham yesterday (Thursday, 12 March) was down 28% compared with the previous year. London was just behind with a 27% drop, with Newcastle and Edinburgh seeing a 26% and 24% reduction respectively. Bristol saw a 16% year-on-year decline while Cardiff was down 15%, Manchester by 13% and Liverpool by 8%. Wireless Social stated: “As of Thursday, we are seeing a 26% like-for-like decline in footfall across the UK and with impending ‘social distancing’ measures, it is only likely to get worse. The budget has not recognised larger operators and the huge number of people they support. Our data clearly shows that our entire sector is at risk with significant concern for our workforce.”
Phil Urban – ‘the industry has seen nothing like it’: Mitchells & Butlers chief executive Phil Urban has said the industry has seen “nothing like it” following the coronavirus (covid-19) outbreak. He told Propel: “These are unique times and what unfolds over the coming few weeks is going to test everyone to the full and put everyone at risk. We’re obviously securitised and, from a trading perspective, I would like to think we have enough buffers. However, for a lot of the companies out there it will be down to what the banks and bondholders want to do. It will be interesting to see if the government intervenes. Perhaps it could make it more palatable for banks to be more supportive to businesses in the industry. If we were to enter an Italian scenario and London was locked down for two months, I think you would see a lot of companies go to the wall. Let’s hope it doesn’t get to that but, if we did get lockdown of a major city for a sustained period, cash flow and paying staff is important but the issue will be what individual companies’ banking and debt scenarios are.” Before the pandemic, Brexit and political uncertainty had dampened consumer confidence, although Urban was more positive coming into this year. He said: “With some stability and a new government in place with a majority and mandate, things were going to get done. That stability meant we could plan and get on with our investment plans. However, coronavirus has meant putting that planning on the back burner. Mothering Sunday will be the first big test for the industry in terms of a key trading touch point.” Urban added: “We had a good Christmas, then we had the storms and now coronavirus, so it has been a torrid start to the year. We are fairly pleased where we are given all that but we’re thinking, as I imagine most of the industry was, that if we get over the storms through to better weather we look forward to the Euros. However, if coronavirus isn’t sorted there will be no Euros and now watching sport in pubs is under threat. We’ve never seen anything like it. It’s difficult to get a strategy set. Obviously you have to follow Public Health England’s advice. You could invest a lot of time in scenario planning but the landscape is changing so quickly. It’s important for the industry to move as one on this.”
New York orders restaurants to reduce capacity by 50%: Restaurants and bars in New York with seating for 500 people or fewer have been ordered to reduce capacity by 50% amid the coronavirus (covid-19) outbreak. Governor Andrew Cuomo and Mayor Bill de Blasio imposed the measure in a bid to curb the spread of coronavirus across New York. Events for more than 500 people have been banned. De Blasio said of the reduced capacity: “That will allow for space in between people.” Any business that does not abide by the new rule to cut occupancy in half will need to close, and the decision will be up to each business, he said. “We don’t do any of this lightly,” he added. “This is difficult stuff. This will have a serious, serious impact on a number of business.” De Blasio also acknowledged “this is going to be a huge dislocation for so many people” as businesses reduce staff or temporarily close as a result of this latest measure. Though it’s not clear how long it will last, it could “easily” be a six-month health crisis, with a longer economic recovery period, he added. Small businesses can look to a no-interest loan, and anybody who faces eviction can receive free legal help from the city, de Blasio said.
Grubhub suspends fees for US independent restaurants: Grubhub has announced it is temporarily suspending collection of up to $100m in commission payments from impacted independent restaurants in the US in response to the impact of coronavirus (covid-19). “Independent restaurants are the lifeblood of our cities and feed our communities,” said Grubhub founder Matt Maloney. “They have been amazing long-term partners for us, and we wanted to help them in their time of need. Our business is their business – so this was an easy decision for us to make.” Grubhub and other third-party delivery firms have previously come under fire for the fees they charge restaurants. Sometimes these fees are as high as 30%. In late-February, New York City councillor Mark Gjonaj proposed a 10% cap on fees for third-party market places. But he commended the announcement from Grubhub. He added: “My office and I have already begun conversations with other third-party food delivery providers such as DoorDash, Postmates and Uber to ask them to reduce their fees and implement other relief measures as restaurants cope with an unprecedented loss in business. Based off of these initial conversations, I feel encouraged that they will do the right thing and put people over profits during this moment of crisis.” Grubhub also noted the creation of a fund to support restaurants and drivers impacted by coronavirus. Dubbed Donate the Change, the programme would allow customers to round up the change from their orders and donate it to the Grubhub Community Relief Fund.

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