Tall order for hospitality industry

The founder of the UK Hospitality Union last week said that half of the UK’s pubs won’t return to business.

Jonathan Downey told Newsweek: “It’s not even in question that 50 percent of pubs, clubs, bars and restaurants won’t reopen again

“We might even be underestimating there. That’s two million jobs gone.

“Think about nightclubs, music venues, your night-time economy, real social life, not just eating and drinking, not just a couple of pints outside a pub or a bite at a decent restaurant. The proper night-time economy is absolutely f***ed.

“I don’t see any way around that apart from with a vaccine. The [profit] margins are so slim, businesses are no longer viable.”

While Prime Minister Boris Johnson has said the government wants to reopen hospitality as soon as possible, there have been no clear answers about whether social distancing guidelines of remaining two meters apart will remain or, as campaigners propose, it will reduced to one metre to allow more customers on to the premises.

And while a 4 July date has been announced for UK venues, this only applies to those with outdoor spaces which means the vast majority still have no idea about when they can go back to operating, let alone operating as usual.

None of the publicans we spoke to were sure of when they can open or seemed to be able to see a way through the crisis without laying off staff. Although they have had the support of the furlough scheme and government grants, their expenses have continued to come in.

To make matters worse, some breweries are asking for up to 50% of rent from pubs who have lost income and still have other expenses coming in.

Government grants of either £10,000 or £25,000 were given to pubs to cover their loss of earnings for the months of March, April and May.

However not all pubs got the grants. For instance, Whelan’s in Uxbridge did not get a grant because their business rates were too high. This does not stop the brewing company Heineken Star Pubs and Bars asking for 25% of the rent for the premises while also taking 50% of the rent for premises that did get the grants.

Austin Whelan told The Irish World: “They’re vultures.

“We’ve all been put in a terrible predicament where the likes of Heineken Star Pubs and Bars want 50% rents.

“They don’t see how many staff you’re still looking after. They don’t see that you have to have contracts for gas, electric, bins. If you’ve got any leased equipment, they’ve all been frozen, the companies have been very good but it’s crazy, it’s ludicrous.

“Greene King have been a different kettle of fish altogether. They’ve been very accommodating. They sat down, had a discussion with each and eery one of their tenants and did what was best across the board. They looked at it on an individual basis while Heineken Star Pubs and Bars didn’t. They just said, ‘If you get the grant, you’re paying 50% rent. If you get a £10,000 grant, you’re paying 25% rent and if you got no grant, you’re paying 25% rent. That’s disgraceful and I fully intend to fight this. What it is is a bully boy tactic.

“I understand they’ve lost money but when you buy a pub you have to put a business plan into place and there’s a thing called code of practice. If your business shows a profit of £45,000 at the end of the year, they get £22,500 and your profit share will be £22,500. If you over perform and you take £150,000, they still get their £22,500, you get your extra money but they’re also getting the volumes on the beer.

“But in my eyes 50% of no profit is nothing. How can they justify coming and asking you for rent? They want it both ways, they want you to improve the pubs, give them the volume, get the extra profit from the barrelage and squeeze you. What they’re doing is disgraceful.

“All their big loans have been suspended, the government suspended everything. They’re still trying to squeeze and get the extra pound of flesh. It’s low.

“The breweries are very powerful people, it’s not going to be easy.

“I pay out massive money every month for electric and gas. You still have to have bin contracts if you’re looking after staff who are living there, you’re supplying them food. I got no grant and they want 25% of my rent.

“I think it’s disgraceful. I paid massive tax last year and I’m entitled to nothing.

“I pay insurance policies every year for all my sites, thousands upon thousands of pounds. You pay thousands and thousands of pounds for these policies and they’re refusing to pay out. No insurance company is paying out.

“It’s disgraceful. Of course you’ve got interruption of business. The government has closed you. They’re freezing mortgages for people. They’re doing all these things. How can the big pub companies come after the rents?”

There are ten venues in the Whelan’s chain but Austin finds it hard to see when he can reopen and when it will be profitable to do so.

“The problem is when you open your doors and you see how things go, the first thing that’s got to be pulled back is the entertainment.

“They’re saying that we’ll only be able to perform at 30-40% of capacity but that’s no good to the likes of Whelan’s. I do live music every Wednesday, Thursday, Friday, Saturday. You’re at a massive loss.

“Do you lay people off? Yes, they’re on furlough at the minute but do you lay them off after? You’re going to have to keep your expenses down. There’s no clarity whatsoever which is terrible.

“We’ve got ten venues and no one knows where we’re going or what’s happening. There’s guidance to say we may open on 4 July but I don’t know how they’re making out we’ll open on 4 July when they’re going on about social distancing and they don’t want crowds gathering.

“How do we open them? I think there’s massive questions to be asked.”

Lee Power of Power’s in Kingsbury is just as unsure about when he can open the doors again and how exactly will resume: “We’ve never been given any information from anyone whatsoever apart from reading it in the newspaper.

“I remember I was in the pub that Friday evening when the speech came out saying all pubs need to shut now and since then I haven’t had any letter or anything.

“People on the street say, ‘What’s happening?’ As if we get any information from the government or from somewhere. I hear everything on the news the same as anyone else.

“I guess one of the speeches will come out maybe on 15 June saying pubs can reopen giving us two weeks notice because you’re going to have to get all the beer back in again. You’ve got to be ready. You can’t just say, ‘Reopen tomorrow’. I have to ring staff, see if the staff are still there, they might have found other jobs by now.”

However, even when the direction to reopen is given, small pubs like Power’s may have to remain closed.

“Say they give us the green light to open, it may not be viable for us to open. A lot of the pubs are thinking the same. It’s cheaper to stay closed maybe because you’ve got to at least break even and pubs are pretty tight at the moment. We don’t make a massive profit.

“If we took say £5,000 a week and let’s say our outgoings are £4,000 a week. If we reopen the outgoings are still going to be £4,000 a week but we won’t take the £5,000.

“We might have had 50 people in before on a Saturday, we might only have 20 now plus maybe extra staff to make sure people stay two metres apart.

“If a band is playing they’re not going to accept less money just because there’s less people there. Staff are not going to say I’ll do it for five pound an hour, not ten pound an hour. You’re still going to have all those costs, Sky, BT, that’s the danger for a small pub reopening early without being able to get 100% of their trade back in. It simply won’t last very long.”

Then there is a question of how pubs will operate. Pub chains like JD Wetherspoon are already investing in new measures for when they can reopen giving staff optional personal protective equipment (PPE), employing more cleaners to constantly wipe down surfaces and dividing tables with screens where a two-metre gap is not possible.

Industry leaders have said a one-metre rule would increase the number of pubs able to open safely from around only a third to three-quarters and make reopening far more commercially viable.

There have also been warnings that as many as two-thirds of pub jobs are at risk unless the rules are changed.
Lee asks if people are going to be asked to wait outside until someone leaves before they can go in, like what is happening at supermarkets.

“It’s not going to work for us. It’s not a place you go into, grab something and go out. It’s a place people come to be comfortable, sociable. Sometimes we have ten people in there and six people will sit around a two man table, they pull the chairs across and join other people.

“It would work in a restaurant maybe. A restaurant has 30 tables, can maybe slim down to 15 tables to keep them apart. People go to a restaurant, sit down at the table and don’t approach the counter. Food gets delivered to the table and they’re in and out in an hour.

“Whereas a pub’s different. People can be in there six or seven hours getting drunk as well. When people get drunk, inhibitions are out. There’s risk of fights. Our pub is not like that but there’s a risk of these things when people have alcohol whereas in a restaurant or a church or a gym, you’re not likely to have it because you’re not going to have the influence of alcohol in there as well.

“I don’t know how we can manage. I guess there will be guidelines. No one can sit at the bar, maybe drinks have to be brought to the table, that doesn’t work for us. I don’t know if we will reopen when we do get the green light. It all depends on the conditions imposed on us.

“It’s so tight anyway. Pubs aren’t making what they used to in the 80s and 90s and making fortunes. There’s a lot of money going out trying to keep the people in so we make a profit but that’s by having a lot of people coming through the doors, our prices are cheap but if we haven’t got those bodies coming through the doors then it’s not going to work. We do a lot of work to get and retain the people we have. We have bands every Saturday, every Sunday wehen a lot of people are cancelling music, we advertise with you guys, they appreciate we have Sky and BT, we have flatscreen TVs, we’re sort of doing everything there but if they restrict the numbers coming in, there’s nothing we can do.

“They might give a couple of thousand a month or something to help. Unless they contribute towards to it, we won’t be able to open because the outgoings are going to be back to 100%.”

A group of 85 Conservative MPs last month wrote to the Chancellor, calling for more financial support for the hospitality industry to help them through the Covid-19 crisis.

The MPs called for an increase in the business rates relief threshold, an extension of the furlough scheme, and for a VAT rebate.

Kevin Fitzpatrick of St. Kentigern’s in Manchester says that publicans will need something whether it is something from the breweries or a reduction in alcohol tax.

“Is the brewery going to drop the price of beer to help us out or is the duty on beer maybe going to be reduced? They have given away an awful lot of money in the last few months. They don’t want to be giving away too much more, do they?

“An article on the Manchester Evening News said to make it work, you would have to make it £10 a pint.

“Your guess is as good as mine when we are going to open. 4 July is going to be for restaurants and pubs with beer gardens.

“Big funerals and big bands are what keeps the club going and I can’t see that coming back until very late in the year.

“Technically it wouldn’t be worth my while opening.

“You have to look after your staff and you have to follow government guidelines.

“If something did happen, it would come down to myself because I’m the licensee.

“But if you’re only allowed a third or a half of people in, it’s not going to pay the bills.

“The other side of it is, are people going to go out as much as they used to? Or are they going to leave it to see how everyone else is coping?

“The pubs and clubs are struggling the last few years. Last year was a tough year. Going forward the situation is going to get tougher. Are you allowed to have functions? No. Are you allowed to have big gatherings? No. Could you have the Wolfe Tones back to play to 300 people? No.

“I can’t see it being financially viable. I might have to lay off some staff.”

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