Three quarters of restaurant and bar operators in the UK have warned they do not expect their businesses to survive with social distancing measures in place. Operators including café chain Paul; JKS, which owns the London restaurants Gymkhana and Hoppers; and hotel group Accor, cautioned that measures designed to stall the spread of coronavirus could pose an existential threat to their businesses. Some said they would have to make staff redundant unless the government’s furlough scheme was extended. The warnings came from a survey of more than 260 restaurant and bar operators by the restaurant guide Square Meal, which will present its findings to a parliamentary advisory committee on Friday. Just over a quarter of respondents said it would be impossible to implement social distancing measures, while 48 per cent said they expected to make staff redundancies in the next month. “Keeping people one metre apart at entrances and exits and toilet areas is impossible.
“We would reduce capacity by around 60 to 70 per cent. This would result in making 50 to 60 per cent of my staff unemployed,” said Tobias Jackson, operations director of Adventure Bar, a 10-strong London chain. Jo Eames, director of Peach Pubs, which runs 20 pubs across the south of England, said: “It’s catastrophic. Margins are so tight and costs so high in hospitality that no business can operate for long with much less than 90 per cent full turnover. Trying to operate at 50 per cent or less will send almost every business into a tailspin of increasing losses.” A number of other operators said constant sanitation — cleaning of surfaces and tableware, and staff handwashing — would diminish the atmosphere and increase costs to businesses that already run on thin margins. “The challenge will be ongoing compliance with health and safety guidelines, and balance between cost management and product execution,” said Jyotin Sethi, owner of JKS. “In our larger restaurants, it is easier to introduce the social distancing measures but they have a larger cost base. Smaller restaurants are much harder to introduce social distancing but they are cheaper to run,” he said. Several casual dining businesses have already gone bust since the government announced its lockdown measures.
Carluccio’s, the Italian chain, went into administration last month along with The Restaurant Group owned brands Chiquito and Food+Fuel. Byron, the burger group, and Busaba, a London-based Thai chain, have appointed KPMG to advise on survival options. Le Pain Quotidien’s UK arm is currently seeking a buyer. The government has yet to announce when lockdown will end but hospitality businesses expect to be among the last allowed to reopen. Many have tried to set up delivery operations to recoup some sales. Mr Jackson said he was modelling four scenarios of different capacities to see at what point the business would break even and planning social distancing “The best plan I have so far is putting up plastic screens between tables. It would look terrible and feel horrible . . . but it might be something that from a financial perspective is better than mothballing.”
Bars and nightclubs are in a particularly difficult position as they rely on people spending time together in proximity. “It’s hard to get people to stay where they are after a drink,” Mr Jackson added. Kate Nicholls, head of UK Hospitality, said the trade body estimated that it would take six months for the sector to recover to break even and that it would need government support beyond the end of lockdown for rent and wages. Almost all the operators surveyed supported a reduction in VAT to 5 per cent to stimulate customer demand.
Source: Financial Times