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Morning Briefing for pub, restaurant and food wervice operators

Tue 28th Jun 2022 - Only a third of hospitality businesses currently profitable, almost half reducing opening hours
Only a third of hospitality businesses currently profitable, almost half reducing opening hours: The profitability of hospitality businesses across the UK is plummeting, with only 37% currently turning a profit, according to a new sector survey. The biggest factors behind this are revealed as being the rising costs of energy (74%), goods (55%) and labour (54%). The survey – conducted by the British Beer & Pub Association, British Institute of Innkeeping and UKHospitality – comes almost a year after the government released its Hospitality Recovery Strategy. This looked to increase the resilience of the sector by improving profitability and putting pubs, bars, and restaurants at the heart of plans to revitalise local economies post-pandemic. However, the picture for hospitality businesses remains bleak, with almost half (45%) forced to reduce opening hours to avoid closing permanently, and one in six reporting they have no cash reserves. Hospitality leaders are now calling on the government to recognise the contribution sector businesses can make to the economy, while noting that less than a third (28%) are currently considering investing in their businesses because of the economic climate. The group highlights three key priorities to get the sector back on track: tackling the current inflationary headwinds facing the sector; reforms that would unleash growth potential; and a new tax and investment regime that facilitates a resilient and productive hospitality sector. In a joint statement, the trade bodies said: “These figures are extremely worrying and demonstrate the critical situation hospitality businesses across the country are currently in. Given the chance, our industry has huge growth potential and the ability to play a critical role in the levelling up of communities in every single part of the UK, but instead we are still struggling to get back on our feet properly after a turbulent two years. In the past few weeks, inflation has hit record levels and costs on key ingredients and utilities has rocketed, while consumer confidence has plummeted, resulting in fewer customers in our venues. We are weathering a perfect storm, but we can’t hold on forever. We need relief as soon as possible before the cost of doing business forces venues to close for good.”

Insurers slam Stonegate’s BI interpretation as landmark high court case reaches closing submissions: Insurers have called pub company Stonegate’s interpretation of its business interruption (BI) coverage a “perversion of language”, as they set out their closing submissions in a landmark £1.1bn covid-19 BI case. The pub company is suing MS Amlin, Zurich and Liberty Mutual in a case that hinges on aggregation, with Stonegate claiming that it is entitled to a payout for each of its 760 premises, in a case that could have extensive implications for overall covid-19 losses. 
Gavin Kealey QC, representing insurers, told London’s High Court that insurers did not cover Stonegate for an epidemic or pandemic, but rather for specific occurrence of a disease. He said that it was a “perversion of language” to claim otherwise, and that Stonegate’s submissions represented a “perversion of the indemnity period”. Kealey told the court Stonegate could have “netted off” furlough payments under standard accounting practices, which would reflect the “commercial reality” of the situation. He said furlough payments constituted a “pure saving”, and any other finding would leave the pub company in effect indemnified twice. The QC said: “If Stonegate had its way, it would have been over-indemnified, because it would have received substantial sums from the government in relation to its wage bill, normally payable from its turnover, and now it wants to bank it twice by getting the money from its insurers.” 
In the final day of the hearing today (Tuesday, June 28), the insurers and Stonegate will both conclude their closing submissions.

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