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Thu 8th Oct 2020 - Update: Hospitality set for shut-down in north, late-night levy row, Shepherd Neame and Hawthorn
Pubs and restaurants in north of England set to close from Monday: Pubs and restaurants in the north of England are set to be closed from Monday (12 October) as part of tougher lock-down restrictions as covid numbers soar. Prime minister Boris Johnson is poised to order hospitality venues to shut in Manchester, Liverpool and Newcastle, according to reports. But he faces a rebellion from MPs, local leaders in the north west and north east and even close allies over the new measures. Johnson intends to unveil his simplified three-tier local lock-down code next week. In plans signed off on Tuesday (6 October), tier one will see current social distancing measures, the “rule of six” and a pub curfew of 10pm enforced. Areas in tier two will have the same restrictions plus a ban on households mixing. Vast swathes of the virus-hit north west and north east would automatically fall under tier three, in which pubs, restaurants and other hospitality businesses will be shut. People will not be able to mix households — except those with exemptions — and will have to abide by the national social distancing laws, such as wearing face masks. Schools, work and retail shops will stay open. Ministers are still working out other details. The measures will be imposed for a limited period – certainly for some weeks – but are yet to be fully agreed. Chancellor Rishi Sunak will help businesses, with workers entitled to a new form of furlough. The looming restrictions come as cases in the north west rose 56% in the seven days to 1 October, while hospital admissions were up 46%. In the north east there was a 46% in cases, with hospital admissions up 45.9%. Greater Manchester mayor Andy Burnham said the north would resist any lock-down unless government worked out a plan with local leaders. Conservative MPs are also threatening to work with Labour to defeat the government next week in a Commons vote on the 10pm curfew. The UK reported 14,162 new covid cases and 70 deaths on Wednesday (7 October).

Pubs and bars in row over late-night levy as 10pm curfew sinks sales: Pubs and bars have urged the government to scrap a tax on late-night openings after it emerged many venues are still being charged despite being forced to close at 10pm. The late-night levy is charged by some councils on venues selling alcohol between midnight and 6am as a way of paying for additional policing. But operators have blasted authorities for continuing to collect the tax despite recent coronavirus restrictions that have forced all sites to close at 10pm. Henry Conlon, chairman of the Camden Inner London Licensees Association, said the ongoing tax was “insensitive to say the least”. “It has always been an unfair tax,” he told the Camden New Journal. “Now we are having a bit of trouble, they are kicking us when we are down.” The late-night levy, which charges up to a maximum of £4,440 per year, was introduced by the Home Office but is applied and enforced at a local level by individual councils. While councils are able to delay suspension of licences for any business that fails to pay the levy, they are not able to pause the charge. Michael Kill, chief executive of the Night Time Industries Association, told City AM the lack of foresight by the government was piling further pressure on the embattled hospitality industry. “Our industry is under enough government-driven financial pressure as it is and every opportunity should be given to ensure money is saved,” he said. A Home Office spokesman said: “The government has taken unprecedented action to help pubs get back to business. We have asked local authorities to use their judgement and allow businesses to continue selling alcohol until they are able to pay the levy.”

Shepherd Neame – business has been profitable and cash generative since reopening: Kent brewer and retailer Shepherd Neame has reported the business has been profitable and cash generative since reopening after lock-down, with like-for-likes in its managed pubs and hotels that were operational down 7.9%. The company stated: “Since our last update on 1 July, almost all of our pubs have reopened, traded successfully and benefited from the Eat Out To Help Out scheme across the summer. Our London pubs have been the last to open and most of these in the last few weeks. Reopening our estate required the development of new ways of working, significant staff training and the introduction of extensive protective measures for staff and to ensure our pubs are covid-secure. Our licensees and team members have adapted to the new ways of working magnificently and immense gratitude is due for their enthusiasm and determination during a very difficult period. Our new financial year started on 28 June. In the 13 weeks since 4 July when pubs were allowed to reopen, the business has been profitable and cash generative. Net debt at the year end was £84.4m with an additional £11m of tax liabilities that had been deferred in agreement with HMRC. As at 26 September net debt was £82.4m with the tax liabilities that had been deferred reduced to £5.7m with a further £1.2m of general deferrals. Liquidity is sufficient for the foreseeable future. Like-for-like sales in those 64 managed pubs and hotels that were open for this period were down 7.9%. Our coastal and destination sites have performed well and food and accommodation sales have been strong but our city centre and central London drinks-led outlets less so. For the 13 weeks to 26 September, we achieved 73% of prior year tenanted pub income. This includes substantial rental support for our licensees throughout the period and the phased opening of our pubs. Own brand beer and cider volumes since the start of the new financial year are down 1.9% versus last year. We anticipate trading during the winter months will be challenging as the new restrictions, such as the ‘rule of six’ and 10pm curfew, impact business and consumer confidence; but we welcome the extension of the reduced VAT rate of 5% until March 2021. Results for the year ending 27 June 2020 will be announced later than usual on Wednesday, 4 November with the annual general meeting to be held on Wednesday, 2 December.”

Hawthorn Leisure ‘returned to profitability within eight weeks of business reopening’: Hawthorn Leisure, the pub operations arm of NewRiver, has reported the business returned to profitability within eight weeks of reopening. In a trading update, NewRiver stated: “Almost all of our community pubs in England, Scotland and Wales are now open and trading. Our pub portfolio has outperformed the wider market since the easing of lock-down restrictions. For the 12 week period since 5 July, like-for-like volumes in our leased and tenanted pubs were down only 8% compared with the same period in 2019, and like-for-like sales in our operator managed pubs were down 16% compared with the same period in 2019. Our trading performance compares favourably to the wider market over the same period, with data from the Coffer Peach Business Tracker reporting pub like-for-like sales are down 18% compared with the same period last year. Hawthorn returned to profitability within eight weeks of reopening. For the month of September 2020, Hawthorn group Ebitda was £1.9m, which is 90% of the Hawthorn group Ebitda in September 2019. The liquidity and alternative use value of pubs is evidenced by the fact that, since 1 April 2020, we have sold 19 pubs, generating £5.1m in proceeds, and two convenience stores, generating £2.1m.”

Crackdown on scrutiny of pre-packs: The government is to update laws for pre-pack administrations by ensuring deals with connected parties face independent scrutiny. Planned new legislation is designed to improve transparency after a series of high-profile pre-pack deals this year, that involved industry moguls and private equity firms buying back assets and left creditors nursing heavy losses. An increasing number of distressed companies are expected to turn to the fast-track insolvency process in the fallout from the coronavirus pandemic. The move also comes in the wake of warnings from the Pre-Pack Pool, a voluntary body set up in 2015 to provide independent oversight of connected pre-packs, that it is at risk of collapse because it is being shunned. Referrals to the Pool fell to only 8% of connected-party pre-packs last year, the lowest rate since its launch. Voluntary referrals are the responsibility of the connected party buyer, not the insolvency practitioner or creditors. Supporters say pre-packs rescue struggling businesses, save jobs and maximise returns to creditors. Critics argue they can be abused to offload debts, particularly when assets are sold to a connected party, such as a director of the failed business. The planned legislation will require mandatory independent scrutiny of pre-pack sales to connected parties. Lord Callanan, minister for corporate responsibility, said the economic downturn made it “more important now than ever that people have confidence in the insolvency process”. He added: “This new law will ensure all sales to connected parties are properly scrutinised, protecting the interests of creditors and the general public, as well as the distressed company.”

Irish chicken and burger concept Coqbull to open flagship site in Soho: Coqbull, the Irish chicken and burger concept from East London Pub co-founder Patrick Frawley, is to open a flagship site in London’s Soho. Propel understands the brand, which operates three sites in Ireland, will take on the former Jamie’s Italian site in Denman Street, for an opening next month. The brand made its London debut earlier this year with a residency at East London Pub Co’s The Lock Tavern in Camden. On that menu was the company’s “chicken wings in buffalo or teriyaki sauce” as well as an “all-day breakfast burger with black pudding, avocado, bacon, fried egg and hollandaise”. Founded in 2015, Coqbull has three restaurants in Cork and Limerick. Speaking at the time of the announcement of its residency at The Lock Tavern, Frawley said: “This brand was designed for the London market and its trial in Ireland has been an incredible success, with three permanent sites. I’m excited and confident about this roll-out in London.” Sammy Weinbaum, of CDG Leisure, acted on the Denman Street deal. Last October, Franco Manca and MeatLiquor were believed to be in advanced talks to operate a joint site at the former Jamie’s Italian in Soho. It would have seen Franco Manca take over the ground floor and basement and MeatLiquor take the top three floors.

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