Propel Morning Briefing Mast Head CPL Learning Link Paul's Twitter Link Greene King Banner
Morning Briefing Strap Line
Sat 11th Dec 2021 - More than 130 sector operators call on ministers to provide financial support in wake of new restrictions
More than 130 sector operators call on ministers to provide financial support in wake of new restrictions: The hospitality sector has pleaded with the government to provide more support in the wake of the Plan B announcement, as it warned the new restrictions would bring the industry’s recovery to a "shuddering halt". More than 130 sector companies employing more than 300,000 people between them have written to prime minister Boris Johnson to warn his new rules risk destroying viable companies unless the Treasury provides further financial support. In the letter UKHospitality states Christmas bookings across the sector were already 9% lower than expectations at the start of December. It goes on to say its members have experienced a 12% decline in sales since Johnson's press conference unveiling the Plan B measures, which include work from home guidance and vaccine passports at nightclubs. The letter, which has been signed by companies including Mitchells & Butlers, Greene King, Stonegate Group, Caffe Nero and Merlin Entertainments, said operators are now expecting sales to be 28% lower over the festive period, which would push the industry "beyond the point of viability". It also warns a full recovery of the sector is at risk of being delayed by as much as six months. It calls on the government to provide support to ensure businesses can survive the first quarter of 2022 and to ensure it can contribute towards the nation’s economic recovery. The letter says: “With each government announcement consumers are becoming more risk averse. With a significant increase in costs, the sector is being pushed beyond the point of viability. Anecdotal evidence suggests that recovery will be severely dented and could be pushed back by three to six months and investment is being held back, both in communities and through the undermining of investor confidence in the sector as a whole. As it stands, we will not start to recover until the second quarter of 2022, just at the time when a whole raft of new costs hit the sector. We appreciate the government has taken a nuanced approach towards pubs and hospitality – with no requirement for face coverings for the majority of the sector and only limited application of covid passes at this stage. However, a dip in consumer sentiment hits our sector the hardest and earliest as a discretionary activity. As a sector we will continue to make sure the potential for transmission in our venues is minimal, as it has been throughout the pandemic, as demonstrated by businesses voluntarily reintroducing protective measures. We maintain the highest standards through compliance with government workplace guidance and much more, reflected by less than 2% of covid-infections being traced to hospitality venues. Considering the measures we have taken, and the financial hit that we will take from these restrictions, we believe the government needs to step in and provide support again. We have worked extensively with BEIS on a recovery strategy that highlighted the huge cost pressures businesses are facing – from labour to energy price rises to insurance costs and more – as well as acute labour shortages that have continued to inhibit our trading. To ensure that businesses can survive the first quarter of 2022 and to ensure we can contribute towards the nation’s economic recovery, the government must: prolong the reduced rate of VAT until at least the end of June 2022 – ahead of a further review; suspend business rates for the first quarter of 2022 for all hospitality businesses and agree to review the 2022-23 cap; and introduce new grants to compensate for a lack of trade from government intervention – in line with the ‘open’ business grants in autumn 2020 – this could include unspent Additional Restrictions Grant underspend. With no furlough as a backstop there is a real concern about the sustainability of jobs in the sector, particularly for businesses based in city centres where the work from home message will hit hardest. We are keen to work with government to provide targeted security for jobs in the sector. As you know there is extreme fragility in the sector and losing a critical trading period, ahead of a traditionally dormant January and February, could be terminal for thousands of businesses – that have never before considered themselves unviable. This risks tens of thousands of job losses and is likely to hit northern communities and city centres the hardest. This must be avoided at all costs if we want to ensure the recovery of hospitality, employment and our high streets. Finally, we urge the government to continue to make clear that while following the new guidelines, customers can continue to visit their local pubs this Christmas to spend quality time with friends and family.”

Bill’s confirms closure of 14 sites, refinance due March 2022: Bill’s, the Richard Caring-backed group, has confirmed it has closed 14 sites after a review of its portfolio, and said it will need to refinance by March next year. In its accounts for the 53 weeks to 3 January 2021, the company said: “The pandemic also gave management a chance to review the performance of all sites, with a focus on previously loss-making sites within the portfolio. As a result of this review, management have taken the decision to close 14 sites. Management are confident that negotiations on reduced rental costs, as well as other cost reductions, will result in the remaining portfolio of sites outperforming much of the casual dining market.” The company reopened its remaining 62 sites on 17 May 2021, which saw “strong trading performances as the general public regained confidence in eating out”. The business said at the balance sheet date, the group’s HSBC facility remained at £42.5m, of which £42.3m was outstanding. The company said it had extended the revolving credit facility through to the end of March 2022. The business said: “In assessing the going concern basis of preparation of the financial statements for the period ended 3 January 2021, the directors have taken into consideration detailed cash flow forecasts for the Bill's business, the forecast compliance with bank covenants, and the continued availability of funding from banks and shareholders covering a period of at least 12 months from the date of approval of the financial statements, which includes the need to refinance the group in March 2022. Following discussions with the group's lender the directors and management are confident that refinancing will be agreed.” The company generated turnover of £62m for the 53 weeks to 3 January 2021 compared with £127m for the 52 weeks to 29 December 2019, which represented a like-for-like decline of £65m (51.2%). It said: “This was as a result of the covid-19 pandemic, which caused the majority of the estate to be closed for at least six months of the year. With some sites only being open for the first quarter of the year, the revenue generated in the months that sites were open was strong. Gross margin has increased to 79% from 76% in prior year, while the labour percentage has significantly increased to 73% from 43%.” Underlying Ebitda during the period was £2.3m (29 December 2019: £6.5m), while pre-tax losses for the business almost doubled to £18.7m. An onerous lease was also identified for 16 sites totalling £5.7m (29 December 2019: £1m). The company said: “Despite the challenges relating to covid-19, the directors and management believe the business is well positioned to be able to navigate through the impact of covid-19 due to its available cash and working capital position, its ability to manage its costs, and the strength and flexibility of its customer proposition. This is further supported by the strength of the open sites trading performances since May 2021.” 

Return to Archive Click Here to Return to the Archive Listing
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
Quickpad by Pepper Banner
Growth Partners - Find out More Banner
Santa Maria MEXI-GO Banner
Quickpad by Pepper Banner
Contract Furniture Group Banner
Bizimply Banner
BrewDog Black Heart Banner
Heineken Silver Banner
Peppadew Banner
Propel Banner
Quickpad by Pepper Banner
Access Banner
Christie & Co Banner
The Licensees Association Banner
Airship – Toggle Banner
Libeo Banner
COREcruitment Banner
Hospitality Rising Banner
Cynergy Bank Banner
John Gaunt Banner
Zonal Banner
HGEM Banner
Bums on Seats Banner
BrewDog Black Heart Banner