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Mon 12th Oct 2020 - Update: Legal lock-down challenge, satisfaction safety with sector remains high, PizzaExpress
Sector leaders prepare to mount legal challenge against lock-down restrictions in England: Sector leaders are preparing to mount a legal challenge to the government’s lock-down restrictions, which they say have decimated the hospitality industry. The challenge to the legality of emergency legislation comes as swathes of the country prepared for stricter lock-down rules. Ministers are planning to outline a new three-tiered system of restrictions, with measures expected to force pubs and restaurants to shut across the north of England. But lawyers for the Night Time Industries Association (NTIA), the British Beer and Pub Association and north west brewers and retailers JW Lees and Joseph Holt, alongside another ten organisations, are to challenge the latest round of coronavirus restrictions affecting the hospitality industry. Sector leaders argue the restrictions, which have already had a significant impact on the hospitality industry, are not based on any “tangible scientific evidence” that closing venues suppresses transmission of coronavirus. NTIA chief executive Michael Kill, said: “The industry has been left with no other option but to legally challenge the so called ‘common sense’ approach narrative from government, on the implementation of further restrictions across the north of England. These new measures will have a catastrophic impact on late-night businesses, and are exacerbated further by an insufficient financial support package presented by the chancellor in an attempt to sustain businesses through this period. This next round of restrictions are hugely disproportionate and unjust, with no scientific rationale or correlation to transmission rates, when compared with other key environments. Systematic closure of businesses across the UK must be challenged when there is no clear evidence or reason.” The government is already facing a challenge to its 10pm curfew for pubs and restaurants in England. The owner of nightclub business G-A-Y, Jeremy Joseph, has called for a judicial review to have the curfew, which was implemented on 24 September, overturned. Supporting the latest legal challenge, Greater Manchester mayor Andy Burnham said the closure of the hospitality industry would disproportionately affect those on the minimum wage. Last week chancellor, Rishi Sunak, announced two-thirds of the wages of workers in businesses forced to close by local and national lock-downs will be covered by the government under an expanded job support scheme. But Burnham argued “damage to the economy will be deep and long-lasting” if the government fails to extend the full furlough scheme, which covered 80% of wages. He said: “The government is treating hospitality industry workers as second-class citizens. Many of them are already on the minimum wage and there is no justification for a furlough scheme that pays two-thirds of their wages when workers in other industries were given four-fifths.”

Public satisfaction with hospitality’s safety stays high as We Hear You reaches 200,000 guests: The vast majority of consumers have been satisfied with pub, bar and restaurant operators’ safety precautions and communications in the three months since lock-down was lifted, the industry-wide We Hear You initiative has shown. The campaign, steered by CGA, Yumpingo and UKHospitality, has collected views from more than 200,000 consumers after visits to almost 1,200 different venues since early July, and has played an important role in the sector’s efforts to listen to guests’ needs and concerns. It showed 92% of consumers think the safety measures they have found in venues are clear, and almost as many (86%) have been satisfied with the precautions they have encountered. A similar number (88%) have been satisfied with how well venue teams have followed hygiene practices, and just as many (88%) thought it was easy to provide track and trace details. There is widespread acceptance precautions have either not affected guests’ experiences (60%), or it is necessary they do so (34%). The number of people thinking their overall experience was better than before lock-down (15%) is almost as many as those who thought it was worse (16%). However, while satisfaction with hygiene remains high, it fell a little in September—from 77% in the first week to 71% in the last. Net promoter scores have stabilised at about 50% in September, after a dip in August. The survey also highlights ongoing concerns around crowding and the social distancing of other guests. Anxiety levels have increased slightly over September, in line with fears of a second wave of infections and increasingly tough restrictions. Safety remains a top priority, with four in five (79%) considering precautionary measures before making visits – a number that has stayed consistent ever since the reopening of hospitality. Yumpingo chief executive and founder Gary Goodman said: “It is encouraging to see the consumer confidence in the hospitality industry as a whole remains so high after three months. It really goes to show the industry is working relentlessly and consistently to keep both consumers and staff safe, while providing a positive and memorable guest experience.”
UKHospitality and Yumpingo are Propel BeatTheVirus campaign members

PizzaExpress set to be taken over by bondholders: PizzaExpress is set to be taken over by its bondholders after a sale process seeking potential buyers failed to drum up a competitive offer. The deal would involve Hony Capital, the private equity firm based in Beijing, handing over the keys to the restaurant chain via a debt-for-equity swap, although Hony is expected to retain control of PizzaExpress’ operations in mainland China, reports The Times. Under the agreement with its secured noteholders and Hony, the group would be restructured and its external debt reduced from £735m to £319m It would receive £144m of new facilities to support development of the business. As part of the restructuring, the British division of PizzaExpress is to go through a company voluntary arrangement (CVA) to enable the group to close 73 uneconomic outlets, with the loss of up to 1,100 jobs. More than 89% of creditors voted to support the CVA, which includes a cut in outstanding rent arrears, reduced rental agreements and a temporary move from quarterly to monthly rents. In parallel with the debt restructuring, the company hired Lazard to seek offers putting a higher value on the business than that implied by the debt-for-equity swap. Barring a last-minute change, no such offer had been received, paving the way for the bondholders to take control. A vote of all bondholders to approve the debt-for-equity swap is due to take place next month. PizzaExpress, which was founded in Soho, central London, in 1965 by the late Peter Boizot, was acquired by Hony in 2014 in an £873 deal. The restaurant company has 627 outlets, including almost 150 outlets overseas, many of them franchises. In the UK it has more than 450 restaurants, all of which were forced to close temporarily during the lock-down.The CVA, which does not affect its Irish or international operations, will involve the permanent closure of sites including the original site on Wardour Street in Soho. The CVA secures 9,000 jobs.

Vue to shut a quarter of UK sites midweek: Cinemas operator Vue is to shut a quarter of its UK cinemas midweek after seeking expert advice about surviving the crisis engulfing the industry. The company – which has hired consultancy Deloitte – will cut back opening times to four days a week at 21 of its 87 sites, keeping them closed on Tuesdays, Wednesdays and Thursdays. The temporary closures come after chief executive Tim Richards said Vue is “looking at all options” following the postponement of the release of the new James Bond film No Time To Die. A statement from Vue said: “We will be temporarily reducing our opening days to ensure our business is financially well placed to withstand the uncertainty ahead.” Cineworld reacted to the Bond release delay last week by temporarily closing all of its 127 UK sites, putting 5,500 jobs at risk. Odeon has moved to reduced weekend-only screenings at a quarter of its 120 venues.

Cake Box reports like-for-likes up 12.1% since reopening, receives record number of new store applications: Cake Box, the specialist retailer of fresh cream cakes, has reported like-for-like sales have increased 12.1% since the business reopened following lock-down and has received a record number of new store applications from franchisees. Revenue for the six months ending 20 September 2020, which included the six weeks of closure, was £8.6m, compared with £8.8m the previous year. The company said it has continued to see an ongoing benefit from the launch of its delivery service through Deliveroo, Just Eat and UberEats, with online sales increasing 81% compared with the same period last year. Six franchise stores were added to the group’s estate during the half year, bringing the total number of stores to 139. Recent store openings included Chatham, Swindon and Hemel Hempstead. In addition, after the period end, three franchise stores are expected to open imminently. The company stated: “The group has a very strong pipeline of new franchisees, driving confidence the franchise store roll-out programme will return to levels seen prior to the onset of covid-19. Currently, the group has received and is holding deposits for 47 sites across the country. The group had £5.0m of cash at period end, having repaid government monies received for the furloughing of group-level employees who were unable to work during the immediate impact of covid-19. As previously announced on 1 September, the group declared a special dividend of 3.2p per share, which will be paid on 23 October.” Co-founder and chief executive Sukh Chamdal said: “This result is testament to the dedication, agility and entrepreneurial spirit of the Cake Box family, particularly our franchisees and their employees. We continue to see strong momentum across the business both in store and online. We have received a record number of new store applications. Despite the wider environment, our proposition for customers and potential franchisees remains highly attractive and we are confident of further progress in the second half.”

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