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Morning Briefing for pub, restaurant and food wervice operators

Mon 10th Aug 2020 - Landlords and operators call on government for rent support
Landlords and operators call on government for rent support: Landlords and operators have joined forces to ask the government to step in and pay commercial rents. Trade bodies have been in talks with ministers about proposals that would see the government fund up to 50% of rent and services charges owed by businesses in the retail, hospitality and leisure sectors. These “Property Bounce Back” grants would be targeted at businesses worst affected by lockdown. It is estimated that about £3bn of rent owed to commercial property landlords for the six months to September will not have been paid, laying bare the acute pressures faced by landlords and tenants. In a joint statement, the British Property Federation, British Retail Consortium, UK Hospitality, ukactive and Revo said: “Without urgent action on rents, many otherwise viable businesses are, through not fault of their own, at imminent risk of failure. Where both landlord and tenant are able to cover at least 50pc of the rent owed, and are able to demonstrate they are working together as economic partners, government should have the confidence to invest in these businesses’ futures and prevent the needless loss of hundreds of thousands of jobs.” The government has tried to support businesses by providing grants and loans that, in theory, could be used to pay rent. However, commercial landlords, many of whom are pension funds, were still owed 36.7pc of quarterly rent due on June 26 by early August, with similarly low collection rates during the second quarter, according to data published last week by Remit Consulting. Retail tenants and landlords appear to be suffering the most, with only 50.5pc of rent due from retail properties for the third quarter collected 35 days after the due date. There are also concerns that the government’s suspension of evictions and winding-up petitions, to try to protect tenants, has prompted some tenants to withhold rent despite being able to pay. Shopping centre owner Intu went bust in June, unable to withstand the effects of the pandemic on top of its long-standing huge debt pile. Analysis commissioned by the trade bodies pushing for the Property Bounce Back grants claims that the estimated £1.75bn cost of paying 50pc of unpaid retail, leisure and hospitality rents for six months would be outweighed by the almost £7bn from tax revenue from sustained economic activity, and 375,000 jobs would be saved. Ignite Economics, which carried out the research for the trade bodies, believes that many businesses unable to pay the rent will either close down or close some of their branches under restructuring. Other countries have introduced taxpayer support for rent. Canada has provided forgivable loans to commercial landlords who agree to cut rents by up to 75pc and suspend evictions. A government spokesman said: “We recognise the huge challenges being faced by commercial tenants and landlords during this period, which is why we’re working closely with them to ensure they are supported and would urge both landlords and tenants to follow the example of others and find solutions that work for both parties. The government has taken unprecedented action to protect jobs and livelihoods, with a package of around £160bn of support, including loans, rates relief and grants for businesses.”

Figures show 22,000 restaurant job losses so far this year: More than 22,000 restaurant jobs have been shed so far this year, after the coronavirus pandemic caused swathes of closures across the sector, according to new figures. Job losses at UK restaurants so far in 2020 are already almost double the number of redundancies for the entirety of 2019, according to the Centre for Retail Research. Figures compiled by the organisation have revealed that 22,039 roles were lost across large restaurant groups and independent operators from the start of the year to 4 August. It said this represents a 95.4% increase on the 11,280 job losses reported during the whole of 2019. The figures also revealed that 1,467 restaurants and casual dining outlets have closed over this period, representing a 59.1% increase on the total 922 sites which closed during 2019. Professor Joshua Bamfield, director of the centre, said: “The sector was already in severe difficulties before the pandemic as a result of rapid over-expansion fuelled by private equity acquisitions, with the enforced lockdown serving to starve operators of revenue bringing restaurateurs now to their knees.” The government had hoped to fend off job losses through its furlough scheme, with analysts now warning that redundancies could continue as the scheme is wound down in the coming months. Chancellor Rishi Sunak also wiped out business rate payments for restaurants for the current financial year as part of financial support measures. Restaurants have this year received a business rates holiday worth £622.13 million as a result, according to analysis by real estate adviser Altus Group.

JW Lees reports 18% boost from Eat Out to Help Out: Manchester brewers JW Lees has seen sales up 18% on last year and 27% up on the previous week in the first week of the government’s ‘Eat Out to Help Out’ scheme. Sales were up 44%, 42% and 60% on Monday, Tuesday and Wednesday, with the company offering a fillet steak and chips for £20 so reduced to just £10 under the scheme. The company stated: “Many customers were coming out to the pub for the first time since lockdown and people were reassured that JW Lees’s pubs were safe to visit with increased covid-19 safety measures in place. Later in the week Thursday and Sunday were both down on the previous year but the company’s managed pubs saw strong growth on both Friday and Saturday. Pub operators had earlier been concerned that the government scheme would just move bookings forward to the earlier part of the week but it has created confidence that it is safe to go back into pubs and that has led to overall growth.” William Lees-Jones, JW Lees managing director, said: “The Chancellor’s positive stance on pubs has given people the confidence to go back to pubs and the 50% deal is a great incentive to go out in the early part of the week. Already this week’s booking are ahead of last week and we look forward to welcoming more returning guests back to our pubs. We now have 85% of JW Lees employees working again and off furlough and we look forward to opening our remaining pubs and hotels over the next month.”

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