Sunak to set out new coronavirus rescue plan: Rishi Sunak will announce today a multibillion-pound package of support for the economy in an attempt to avoid mass redundancies this winter. The Times reports that the chancellor’s measures will include wage subsidies for part-time workers, VAT cuts and more loans for struggling businesses. Sunak will set out his “winter economy plan” in the Commons. It is expected to feature a German-style subsidy scheme in which the government would help to pay the wages of people returning to work on a part-time basis. The system is designed to encourage companies to keep on workers in viable jobs while ensuring that others are not retained in “zombie posts” that exist only because of the government’s furlough scheme, which ends on October 31. “There is a difficult trade-off between keeping people in jobs and helping them find new ones,” a Treasury source said. The chancellor is also expected today to extend four loan schemes for businesses until the end of November and increase the terms of loans from six years to ten in a move that will sharply reduce monthly repayments. The schemes have already provided £53 billion worth of loans to companies. There will be a series of measures to support sectors hardest hit by coronavirus restrictions. This year the government cut VAT for the hospitality and tourism industry to 5% at a cost of £4 billion. The reduction was due to last until January but will be extended to the end of March. Under the German kurzarbeit [short-working] scheme, employers pay the wages of staff while they are at work and the state covers 80% of their wages when they are not. Ministers have been considering plans to subsidise the wages of employees who can work at least half of their normal hours. Companies would pick up the wages for hours covered by employees and the government would pay a third of their wages while they were not working. Employers would pay another third and employees would forgo a third. The scheme would cost about £500 million a month against the £4 billion cost of the furlough scheme.
Mitchells & Butlers reports like-for-likes down 6.4% in September: Mitchells & Butlers has reported like-for-like sales were down 6.4% in the first three weeks of September. The company stated: “Following enforced closure in response to the covid-19 pandemic in March we were able to reopen the vast majority of our estate on 4 July thanks to the hard work and dedication of our teams. We have now been trading for 11 weeks and at the date of this announcement the number of sites which have reopened has increased to over 95% of the estate. During the period since reopening we have, as before, continued to outperform the market, benefiting in particular from the breadth of our estate and the balanced exposure we have both regionally and across offerings. In July like-for-like sales declined by 32.4% impacted by reduced capacity as a result of enforcement of social distancing measures and by consumers’ caution to visit restaurants and pubs. During August, the well-publicised government funded Eat Out to Help Out scheme plus a temporary reduction in the rate of VAT on certain supplies combined to help return the business to like-for-like sales growth, of 1.4%. Subsequent trading in the first three weeks of September has settled slightly below this at a like-for-like sales decline of 6.4% prior to the introduction of additional trading restrictions this week. Total sales over the year to date have declined by 35.4% due to the closure period. On 12 June the group announced revised financing arrangements that had been agreed with our main creditors to provide a platform of both additional liquidity and improved financial flexibility in order to meet the challenge presented by covid-19. The group currently has unsecured cash balances of c.£100m, in addition to undrawn committed unsecured facilities of c.£140m. Before the closure of the estate we had completed 168 investment projects including two acquisitions. The investment programme was suspended in March and resumption will be considered through continuous review of operational performance and cash flow management.” Phil Urban, chief executive, said: “After a difficult period of closure, we have been delighted to welcome back our guests with the vast majority of our sites open and trading again under covid-secure procedures. I am particularly impressed by the way in which our teams have made this possible by responding to the challenge of our new operating environment with energy and enthusiasm. The future remains both challenging and uncertain, with only this week a curfew and other additional restrictions being imposed on how and when we can operate. However, we believe we are well placed to meet that challenge and to keep Mitchells & Butlers at the forefront of the eating and drinking-out market.”
NI considers curfew: Stormont ministers will discuss whether to impose a curfew on Northern Ireland’s hospitality sector when they meet later today (Thursday). There is an expectation in the hospitality industry that operating rules will be tightened further. The situation in NI is further complicated as off-licences and supermarkets can sell alcohol until 23:00 most days. The cut-off is 22:00 on Sundays. The BBC stated: “It is understood that imposing a curfew earlier than 23:00 could mean changing legislation around NI’s current licensing laws. Ministers will consider the evidence and options from the chief medical officer Dr Michael McBride on Thursday afternoon. If ministers agree to bring in a curfew it is unclear when it would take effect, as the move will require new legislation. On Wednesday, First Minister Arlene Foster said the executive did not want to ‘displace people from pubs into house parties’. Hospitality industry representatives have called on the executive to agree to a curfew of 23:30.” Colin Neill, of Hospitality Ulster, said the 90-minute time difference would affect many businesses. “In reality, it is 50-70% of an already reduced income and will reduce staff hours or the need to bring staff back off furlough,” he said. “We would ask that the NI Executive listens to the heartfelt plea of the sector and chooses a 23:30 closure time if a curfew is imposed, to give some chance to those who have had such an awful time in the last number of months.”
Escape Hunt reports encouraging trading: Escape room operator Escape Hunt has reported encouraging trading. Ahead of its AGM, chairman Richard Rose stated: “Trading in our UK owner-operated sites has been encouraging since we re-opened on 12 July 2020. We initially chose to open sites on Thursdays to Sundays only, with the exception of the Summer Bank Holiday on 31 August 2020 and have since extended our opening from Wednesday to Sunday. In the first eight weeks after re-opening to 6 September 2020, sales grew from an initial level of around 25% of the seven-day week’s sales in the equivalent week in 2019 to over 90% of sales in the equivalent week in 2019 in each of the last two weeks of the eight-week period. Since then September has, as expected, seen the pace of recovery slow, although sales in the six weeks to 20 September were nevertheless an encouraging 72% of the same period in 2019. Additionally, helped by the UK government’s flexible furlough scheme and our reduced operating hours, we have been able to operate sites significantly more efficiently with lower labour cost ratios than we have historically been able to achieve. As expected, the first four weeks following re-opening generated site level Ebitda losses as the level of sales was not sufficient to cover fixed costs, including property. However, in the six-week period to 20 September 2020, the growth in sales resulted in a positive site level Ebitda which was approximately 33% higher than the site level Ebitda in the equivalent six-week period in 2019. Whilst the period under consideration is admittedly short, the performance is encouraging, in particular the significantly higher profit conversion ratios achieved. We are, however, aware of the growing rate of covid-19 infections and the likelihood of further restrictions being imposed, whether national or local, which may impact sentiment and performance. With the exception of six of our thirty eight sites, our international franchise network has also re-opened. While the rate of recovery varies in different parts of the world, overall we remain confident that key regions are recovering and will continue to perform in future. We remain positive, in particular, about the prospects for our US business through our area representative agreement with PCH. In other areas, we are making progress on our strategy. As previously announced, on 23 September 2020, we opened our new site in Norwich to the public and our site in Basingstoke is well advanced and scheduled to open in October 2020. We have exchanged and completed contracts and are on site at a new site in Cheltenham and are in advanced legal discussions on a further two sites. We have also been making progress on other initiatives. We were delighted to be able to launch a series of downloadable, print and play games during lockdown. The most recent of these has been done in partnership with Netflix to coincide with the anticipated release of a Netflix Original Film and represents an important step in developing our ‘Escape Hunt for Brands’ proposition. In addition, we launched a remote play format which enables players collaborating remotely to direct a games master around a physical room whilst solving puzzles. We have been developing the range of remote and outdoor games which we offer using them to further develop both our ‘Escape Hunt for Brands’ and ‘Escape Hunt for Business’ propositions.”