Trouble brewing for UK pubs with post-COVID distancing rules

The new normal? UK pub industry faces mass bankruptcies.

This article is part of our special report Hospitality sector: Re-connecting EU citizens after the pandemic.

Grant Convey sums up the existential threat facing the UK pub industry in eight words: “We can’t survive with the two-metre rule”. And many of his colleagues agree.

Few institutions are as recognisably British as the local pub. And few sectors have suffered more from the lockdown measures imposed to curb the spread of the coronavirus pandemic.

The British Beer and Pubs Association revealed that the first quarter of 2020 saw the lowest beer sales in 20 years, while pubs recorded a 16% drop in sales. With all UK pubs having been shuttered since mid-March because of the lockdown, those numbers are expected to have fallen off an even steeper cliff between April and June.

But as the lockdown measures gradually start to ease, new but equally existential problems face the industry. Most pubs cannot survive financially if social distancing rules only allow them to operate at 25-30% capacity, which is likely to become the new normal for the remainder of 2020.

After surveying its members last month, the British Beer and Pubs Association found that 19,000 out of the UK’s 47,000 pubs believe they will go bankrupt without an expanded government support programme to compensate them for lost business from the coronavirus pandemic.

4 July had been earmarked by Boris Johnson’s government as the likely date when pubs can re-open, but the date has not been finalised, nor have any health and safety and social distancing guidelines.

Ministers are warning that social-distancing rules will remain in place for a number of months, leaving pubs and restaurants facing a lost year.

The BBPA is calling for the government to extend its grant scheme for hospitality businesses to provide financial support for several months after the end of the lockdown.

Convey, whose business runs the pubs and catering at a number of golf clubs across London, says that many pubs will go to the wall once the furlough scheme ends.

“Probably about a third of it is in real danger,” he says.

With the UK enjoying more June sun and the prospect of a hot summer, beer gardens will still be able to do a good trade even while social distancing remains in place.

But pubs and cafes will face further problems when the weather turns cold. With social distancing rules still likely to be in place, they will have to invest in outdoor seating and heating to serve customers outside.

Meanwhile, increasing protective measures for indoor premises will add other costs. “You’ll have to clean everything and then you end up having more people cleaning than serving,” says Convey.

Like some restaurants, a number of pubs and bars have tried to limit the economic damage by selling their stock during the lockdown and offering takeaway food and drink.

But the drop is in income is still huge. Pubs and bars offering takeaway services are getting around 20% of their budgeted revenue.

Most of the UK’s pubs and bars are small businesses and, as such, have been eligible for government grant schemes. Meanwhile, their staff have had 80% of their wages paid directly by the government since mid-March under the furlough scheme which has now been extended until August.

Convey says the UK hospitality sector will need to reform to survive, noting that pre-COVID “the margins over the years have been squeezed. Even the suppliers have squeezed the margins to us.”

In the meantime, pub landlords want the government to maintain the furlough scheme until the end of 2020.

Convey says all his staff are currently furloughed though he hopes to be able to bring back several of them part-time in the next two months.

The wedding industry and functions have also been badly hit. “A lot of our business is based on functions and weddings and we can’t get 100 people in a room,” he complains.

Nor has the government offered any time scale on when wedding receptions – currently limited to ten people – will return to anything close to normality.

“It doesn’t look overly bright,” Convey concedes, with more than a hint of understatement.

[Edited by Zoran Radosavljevic]

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