By James Grimes, director of AG&G Chartered Surveyors
In these uncertain times, each of us seeks to make the best of what we have. The acceptance of communication technology in everyday business use has increased to an unprecedented level. Observers believe the way in which many of us have embraced new ways of interacting in order to work productively away from the office will stay with us long after the Covid-19 virus is a distant, harrowing memory.
The hospitality sector has faced even more issues of its own. At the time of writing there remains uncertainty as to how and when pubs and restaurants might reopen, in what form and with what new safeguard requirements. But the hospitality industry is resilient and one of the most creative; it after all needs to be as it encourages customers to purchase food and beverage non-essentials, at premium prices.
There have been predictions in the press that the current epidemic will lead to the permanent closure of up to 15,000 pubs in the UK. That is getting on for one third of the remaining pub stock and if true, it makes for shocking reading. I worked through the last two major economic recessions of the early 1990â€™s and from 2008 and saw first-hand the way in which unviable pubs were closed and sold off for alternative uses. So brutal was the cull each time, the conservationists eventually managed to convince government that enough was enough. Pubs now have special planning and preservation rules all of their own. Preservation is considered sacrosanct and through the Localism Act, pubs may now be forced to remain in existing use (whether opened or closed for business) by way of being listed as Assets of Community Value (ACV).
In my opinion the Covid 19 virus has brought forward and exacerbated many of the negative issues facing the pub sector, making the viability of so many pub businesses once more open to question and debate.
The obstacles ahead of re-opening include the following:-
1) The economy has entered a recession. Whether or not this turns out to be the biggest recession in 300 years (as predicted by some) remains to be seen. But we can expect unemployment to rise to the highest level in a generation; the costs of imported goods to increase; and the burden of taxation to substantially increase to pay for this lock down. The average pocket will have less disposable cash available for non-essential items and pub visits are, alas included in such discretionary spending.
2) Every single pub in the land will incur a large start-up cost to re-open, not least because stock already purchased has expired and needs to be literally thrown down the drain. Staff need to be retrained for post lock down customer service. And the postponed lock-down debts will re-emerge with vigour from all quarters.
3) Customer tastes and demands have changed, at least in the short term. Whilst some, my own teenage children included, cannot wait to escape the confines of lockdown and â€˜partyâ€™, others will be far more cautious, not least the elderly members of society. Will pub visits really be alluring whilst the virus has no vaccine or effective treatment? And is drinking from home and socialising via â€˜Zoomâ€™ so bad? It is cheaper after all, and boring conversation can be ended at the flick of a mouse!
4) Â The legal and ethical requirements to re-open will necessitate the implementation of customer social distancing; lower density trading; staff safety obligations; and the use of disposable food and beverage containers. Quite how the traditional â€˜pub atmosphereâ€™ is expected to prevail in such circumstances remains to be seen.
5) The supply of labour into our pubs will be an increasing challenge also. Foreign staff make up an enormous proportion of the hospitality workforce and Brexit at the end of the year will see such â€˜unskilledâ€™ workers barred from our shores. It is also possible that the odd publican, in a lower end business with little to show for his/ her efforts each year will look at the government grants as windfall gains and hand back the keys to their respective landlords.
The upshot is that the post lockdown pub industry will be entirely different and through no fault of anyone, not all pubs can survive on a commercial basis.Â Whether as a result of â€˜saving the pubâ€™ via planning legislation or an improvement and increase in the variety of niche beverages available at the bar, there has been a renaissance in the sector with many pubs increasing in performance and community appeal. It is hoped that the easing of the lockdown conditions will see a resumption in business for the successful pubs. But what about those predicted to close for reasons of unviability? Will they all become untouchable so far as other potential uses are concerned? And therefore, stay empty and an eye saw for the local community in which they sit?
Through trading or rental performance significantly reducing, perhaps only for the short term but quite possibly for the foreseeable future, the main bank lenders in the sector will be faced with customer breaches of borrowing covenants. Rather than being obliged to act and repossess pub buildings only to then be sold off in batches to speculators and an ad hoc future of the properties being likely, might it be sensible for planning authorities to permit other uses, particularly to the upper parts? The residential shortages in larger cities are well documented already. But the Covid 19 pandemic has seen a new element of urban society suddenly recognised and catered for, that of the homeless. Rather than having the unfortunate underclass literally perish on our streets, the decision was made early to offer temporary emergency accommodation including budget hotels, all paid by government. Might the upper parts of unviable pubs not lend themselves to conversion into social housing and thereby provide a longer-term solution? This would reduce the social problems of homelessness and town centre voids in one foul swoop. And the future housing costs would be much lower than the rack rate at a budget hotel.
As we emerge from this crisis, it will be vital that the planning system responds to emerging trends and changing demands in order to encourage business activity. We have seen numerous examples of pubs and restaurants adaptingÂ over the past few months.Â The Red Lion in Ealing has reopened as a corner store for the surrounding community, selling Italian foods as well as draught beer and wines to takeaway. Fast food chain Leon were quick to convert some of their 65 venues into shops selling click and collect meals. Alan Lorrimer, owner of Piano Works, has recruited a host of operators to support his #UKGrandOutdoorCafe initiative which aims to convert public spaces into outdoor bars, restaurants and cafes until the end of Summer.Â It is increasingly clear that in order to restart the economy the Government will need to consider a more permissive approach to land uses with flexibility to provide a range of different uses within non-residential buildings.
As a society we have been forced to adapt to the current pandemic and it is now the turn of authorities and owners of buildings in the urban environment to adapt and create a legacy for current and future generations. It appears that the government might well relax panning laws to enable use of outdoor spaces with the proposed pedestrianisation of Soho gaining momentum. (It is hoped the relaxation will be applied to Premises Licences as well!) Rather like the way numerous stables were converted into other uses when the automobiles superseded horses as the main form of travel, many outdated pub buildings no longer serve the purpose they were intended for. Relaxation of the protective laws might just reignite enlightened thinking by all concerned rather than the bleak desolate future predicted by some today.