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Tue 16th Mar 2021 - Opinion Special: The first cut was the deepest by Mark Wingett

The first cut was the deepest by Mark Wingett

Beginning in the summer of 1973, John Lennon started what was to become known as his “lost weekend”. Separated from what was seen as his “emotional rock” Yoko Ono, the “weekend” would last 18 months until early 1975, when the former Beatle and Ono would be reunited. Those months marked a period of intense creativity for Lennon – three albums recorded – but his outrageous behaviour and drug dependence escalated. A year ago today, Boris Johnson stood up to address the nation and told people to avoid pubs, clubs and other such venues – but stopped short of telling them to close. In doing so, he fired the starting gun on the UK hospitality’s own “lost weekend”, one that has seen resilience and innovation intensify but also its reliance on government aid and restrictions has intensified to a worrying degree. That evening, no one had any perception of what was about to happen next… 12 months that would start with compliance and relief but would end with frustration, anger and legal challenges.
 
As an industry source told Propel that evening of 16 March 2020: “This is an absolute disgrace. This isn’t even a lockdown – presumably we limp along now (with everywhere empty) and then there will be a lockdown. There is a complete lack of certainty and reassurance from the government. We need a business continuity and recovery plan. We’ve got nothing.” It followed a six-week slide in footfall and for city centre venues, which was down 70% at this point. As Loungers chairman Alex Reilley said: “It was the start of the most traumatic week in the history of hospitality in the UK. The concept of full lockdown seemed so surreal and we all hoped would last a matter of weeks and yet here we are one year on.” It was a horrible week, so much so that when the lockdown came it felt like a relief, as one operator said: “That feeling you shouldn’t really be open but not knowing how not to be.” Johnson said at the time: “This is going to be a considerable challenge for businesses big and small, and we will make sure we give them the support they need. We need to give businesses the space to make sure they can come back from this and will work with them to make sure they do.” Whatever it takes, as his chancellor Rishi Sunak would say four days later, announcing that initial support, including the furlough scheme – a refrain Sunak has sadly had to repeat over the past 12 months, as what was first thought would be weeks of closure and disruption turned, into months and now a year.
 
Confidence, footfall and share prices all plummeted. The furlough scheme, which brought initial relief – the size of the intervention was extraordinary – would, during the course of the year and many extensions, soon be seen as a plus for employees but was a key part of the unprecedented cash burn the sector was dealing with. For some, the initial furlough scheme announcement came 24 hours too late after whole swathes of the sector had already made the tough decision to let staff go, economically unable to support them any longer without irretrievably destroying their businesses. By the end of March, most hospitality businesses were actually or technically insolvent. Closures, job losses and what started out as a trickle of restructuring processes, became a flood as the lockdown extended out in front of us. “Who will ‘CVA’ next?”, became a daily question, as much as the weekly predictions of “if we reopen in (insert summer month), we could get back to (insert percentage of trading levels versus 2019 by (insert winter month/Christmas/first quarter 2021)”. Businesses shrunk dramatically and transformationally. The Restaurant Group started 2020 with circa 650 restaurants, it finished with about 400, and in the strange times we live in it picked up an investor of the year award recently. Speaking of sentences and terms, no one thought they would be using at the start of 2020 – “covid-secure” was now the goal, with significant investment spent on making venues ready to welcome consumers back. By July last year, Loungers had £1m worth of furniture tucked away in warehouses. For Reilley, June was a month in which he oversaw the transportation of thousands of unusable tables, chairs, stools, sofas, and other such comfortable seating, so that they might be stored until social distancing was no longer a necessity for the hospitality trade. They still sit there, at a continually growing cost.
 
Growth strategies were flipped to ones of survival. As I have written before, the crisis started what was to be the most intense phase of due diligence being carried out on businesses the sector has ever experienced. Cash was king and Zoom calls became the daily norm, all with one eye (and a lot of hope) on when we could reopen and how. Many pivoted to delivery, a lot focused on feeding the NHS, all were determined to be there when the sector reopened, determined to show that the sector was worth the support that was provided, whether you thought it was proportionate or not. All had to get used to the two-metre rule, or what would become one-metre-plus; table service, the rule of six, masks and Perspex screens. All adapted, what else could they do? It would be OK, things would be back to “normal” by September we were promised. And to help, here is a discounting-scheme on steroids in the form of Eat Out To Help Out and a VAT cut – the former to get people back out and provide confidence in the sector, the latter to help operators repair balance sheets. Record Monday to Wednesday trading figures ensued and pent-up demand was there. A sector could gratefully get back to doing what it did best.
 
Sadly, it was an illusion that would only last until the end of October and a further four-week lockdown. But there was also a national tier system to deal with. It was also clear, by now, that having listened to the sector on how it could reopen in July, the government had turned its back on that collaborative approach, summed up by the introduction of the 10pm curfew measure – further denting confidence in the understanding that authorities had on what it took to operate in the sector, one that is regulated and proven to be safe time and time again, but was now increasingly being used a as a scapegoat for failings elsewhere. It was becoming clear that the summer months, would be a too-brief respite from some cruel psychological exercise/or torture to be more appropriate, of dealing with a growing list of restrictions, which tier you were in, and of coping while having no clarity on when and how you would be able to operate. Perhaps some revenue could be made up in the run-up to Christmas? However, after only 11 days of reduced trading, and with just 24 hours’ notice, pubs and restaurants in London were told to shut, as those in retail continued to trade. As one operator quipped at the time: “You can stop shooting lads, we’re already dead.” The demonisation of the wet-led sector over the course of the crisis has been disgraceful and, sadly, predictable but don’t worry, here was the prime minister giving you a £1,000 grant to get you through.
 
The majority of the sector started this year, as it spent most of 2020, in some form of lockdown. As David McDowall, chief operating officer at BrewDog, tweeted: “It’s a brutal truth [that] tens of thousands of businesses, and millions of livelihoods, move into 2021 hanging by a thread.” Devastatingly, many have already been forced to give up the fight. Almost 12,000 licensed premises have closed permanently in Britain since December 2019 – at a record rate of more than one an hour, according to the latest Market Recovery Monitor from CGA and AlixPartners. While 4,170 new sites have been recorded since December 2019, the loss of 11,894 venues means there have been almost three closures for every fresh opening. And the pain is not over yet. As Karl Chessell, CGA’s business unit director for hospitality operators and food, EMEA. “The wipeout of Christmas trade was clearly the final blow for many businesses and the long wait others now face to open their doors, sadly, means closures will mount even higher.”
 
But we have been given “unprecedented support”. One of the recurring themes for me over the past 12 months has been conversations with my father-in-law in which, invariably at some point in talking about the plight of the hospitality sector, he will say “but you can’t fault the government for all the support its provided pubs and restaurants”. What follows is me explaining how much of this “support” doesn’t touch the sides, will leave much of the sector battling with a debt pile for years to come and will be a useless waste of taxpayers’ money if a solution to the rent situation isn’t found – and quick. It is a conversational can that has been kicked down the road as much as the one on rent has been. At least he agrees that it doesn’t make sense that non-essential retail can reopen next month before indoor hospitality can. Who would have thought though that a year on from Boris telling us to avoid the sector, we would be taking legal action against the government to force a judicial review of said roadmap? Follow the science, data not dates, the industry has had enough of soundbites without substance. As Hugh Osmond said at the weekend, “time is of the essence” with the “cost of lockdown to the hospitality industry at £200m a day”. By the time we exit lockdown, unless the legal challenge is successful, the majority of the hospitality sector will have been closed by law with no revenue for ten months out of 14.

The past 12 months has pushed many in the sector over or close to the edge, and that week starting from 16 March was probably the most traumatic. Lessons, however painful, will have been learned – whether that is about the resilience of teams/business, operational efficiencies, use of delivery and tech, or others that have been further underpinned – that this is the most resilient, innovative and collaborative sector, one that still has a very important role to play in the recovery of the country – given a fair chance. Things will never be the same again, they could be even better, but there are, sadly, some further significant hurdles to get over first and a lengthy recovery period ahead – subject to further government intervention. To think 12 months this week, a whole sector was told to close down indefinitely, but instead of an outcry, the introduction of the furlough scheme meant there was relief, even some rejoicing. We were truly living in extraordinary times. Of course, the bigger picture dictated that following the science when it came to trying to mitigate the growing threat of the coronavirus outbreak meant closing all pubs, restaurants, cafes and bars across the UK, was the right, and only thing to do. The success of the vaccine programme means that shouldn’t be repeated, that’s what we have been promised.  To those who have got this far, it has been an extraordinary journey, one that one managing director told me “nearly put me in an asylum”. A summer of celebration/rebirth is slowly, too slowly, coming tantalisingly into view. A glass or two will be raised for those lost over the past 12 months, including those businesses and jobs. No one will look back on the past year with anything but a sense of sadness and loss, many will want to forget it for good. Some will see getting through it as a badge of honour, still here to drive the sector into a period of renewal. A year on from forcing the sector to limp on powerless for a few days, it would be nice, but perhaps a case of suspending reality, to think this summer we could have the prime minister encouraging people to go to pubs and restaurants, repairing some of the damage his mixed messaging has caused. To slightly tweak a lyric from Mr Lennon – “Nobody told us there’d be days like these, strange days indeed – strange days indeed”.
Mark Wingett is Propel insights editor


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