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Fri 24th Dec 2021 - Opinion Special: Let's hope the end is nigh

Let's hope the end is nigh by Mark Wingett

A classic trope in horror, sci-fi or gangster films, is the scene when the beast/baddie appears to have been killed off, and as the main protagonist relaxes, they come back to life for one last battle/fight. It is hoped the rise of Omicron (it even sounds like the title of a Transformers film) plays out to that theme. The current data is pointing towards what could be the beginning of the end of variant hysteria, and a decisive step towards the “living with covid” mantra first put forward in the summer. Positives might be hard to find at present, as many across the sector grapple with balance sheets hit by cancellations during this crucial trading period. Some have closed until the new year, others are battling with a new “pingdemic”. Many companies that were already vulnerable before the virus arrived have been lost, and the impact of the last few weeks, and tough start to next year, will lead to others disappearing from the sector. That is sadly inevitable, hence the anger and frustration with the government’s latest mixed messaging and attempt at support. The sector is at its wits’ end, but it can also start to see the endgame. The challenge will be to bridge what is hoped is the final gap, both mentally and economically.

I expect the chancellor Rishi Sunak regrets his “whatever it takes” rhetoric at the start of the crisis, but not his warning that “not every business will be saved”. He can’t save every business or look after every sector. I would argue it is also difficult for the Treasury to know what support it should provide when it doesn’t yet know the scale of the problem, as has been the case over the past few weeks. Speaking at the last Propel Multi-Club Conference of the year, serial sector investor Luke Johnson said: “A part of me says we have had our hand out in a big way, bigger than any other industry for the last 18 months; we are in business, in the private sector, we are not in the begging game. So, a part of me says enough now, we cannot exist on subsidies. On the other hand, if it could cut VAT for out-of-home eating like they has happened in other countries and reform rates, that would be wonderful.” Johnson was speaking before Omicron was even heard off, but does there come a point where we are in danger of being seen like whingers and the public turning on us?

Let’s look at the latest support provided this week. Sunak unveiled a £1bn package of help for hospitality firms left struggling by a raft of cancellations as consumer confidence plummets in the face of rising cases of the Omicron variant. They include reimbursement for sick pay for eligible businesses, and one-off grants of up to £6,000 for firms able to prove they have been affected by Omicron. For many it was too little too late, for others it was insulting, inadequate, another short-term sticking plaster to place on gaping wounds. I fear, though, any support will never be enough. But stepping back, what other sector was singled out for support? The travel industry has been hit hard, if not harder by the crisis, but there was no support package announced this week. The support also opened old wounds. Some argued it would be great for the bigger corporations, a chance to bolster their balance sheets. I would argue a £2,000, £4,000 or £6,000 grant would make a bigger dent in an independent cafe’s balance sheet than a premium pub or restaurant operation, that would normally be turning over circa £60,000 or more a week.

One of the less savoury parts of this week was that frustration boiled over and people, some who should know better, started having pops at those who have been at the forefront of trying to get concessions and support for the sector over the past 20 months. None of us were on the calls or in the room with the government, or privy to the trade-offs that might have been needed. Of course, some of the rhetoric used after the announcement of the support, that it was generous, will have stuck in the throat, but as I have written previously, Kate Nicholls, at UKHospitality, and Emma McClarkin, at the British Beer & Pub Association, know they have to play the long game when it comes to securing meaningful support. How would it have looked if they had turned around and rubbished the support provided, when many thought and feared no support was going to come in the first place? Perhaps that was the caveat, show some gratitude. And let’s be honest, we need to keep Sunak onside for further battles ahead, including meaningful discussions about keeping VAT for the sector at 12.5% beyond the end of March. We are “at the table”, now is not the time to be asked to leave.

We can continue to trade, yes with one hand behind our backs (some would argue both), but there is a growing sense the government doesn’t want to lockdown the sector, indeed the country, again. As an aside, unsurprisingly it is those operators based in city centres that have been impacted most by the current “lockdown by stealth”, as corporate booking dropped off a cliff. I expect those in more rural and suburban areas may have held up better than some would have feared. Some will be struggling to make sure they have enough staff in place to match what demand remains. On possible further restrictions, you would imagine Boris Johnson would rather stay away from the draconian measures set to be introduced by his counterparts in Wales and Scotland. The government must also be aware by now of the psychological damage lockdowns, even the threat of them, have on the country.

There is growing optimism that by the end of January, any restrictions, if more need to be brought in post-Christmas Day, will be lifted. The hope is the impressive trading levels seen before they fell off a cliff, will allow the majority to survive until then, and that pent-up demand will again kick in. The first quarter of next year was always going to be tough. A post-covid shakeout was always going to provide more casualties, but also opportunities for growth – a K-shaped recovery still remains on the cards. 2021 was the year that companies began to adapt to a new model and market, and next year those learnings will need to be built on. Much will have changed, and will continue to change.

As Loungers chairman Alex Reilley tweeted recently: “If the pandemic has demonstrated one thing it’s that the force is strong in hospitality. Amazing camaraderie, be it big business or small independent, from a sector with a united voice and a big heart. However, the nonsense of the last few days has clearly exposed how on the edge a lot of brilliant businesses and operators are. We need to continue to stand together and fight but, more so than ever before, we need to lend an ear, to support, and help in any way we can our fellow caterers. The sector might be down but it’s not out.” Indeed. The sector continues to go above and beyond, let’s hope that is not forgotten by the government and consumers. From myself and all at Propel, have a safe and as good a festive season as you can. Here’s to a more positive and prosperous 2022. 
Mark Wingett is Propel group editor

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