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‘Two years to get back to pre-coronavirus profits’

By Nicholas Robinson contact

- Last updated on GMT

Long wait ahead: most operators believe it will take two years to reach ‘normal’ profit levels
Long wait ahead: most operators believe it will take two years to reach ‘normal’ profit levels

Related tags: Coronavirus

Most operators, asked in a snapshot poll of hospitality leaders, have said it will take up to two years to reach pre-coronavirus lockdown profit levels, while 88% of those asked have not agreed favourable rent terms with landlords over the coming months.

The weekly poll by HIM/MCA Insight, a division of The Morning Advertiser​​’s parent company William Reed, showed 41% of the 277 pub operators asked don’t believe they will return to “normal” profit levels for at least 24 months.

Just 4% of those asked said they would reach pre-lockdown profits in under six months, while 26% said it would take between seven and 12 months, and 14% said up to three years. A further 6% believe it will take more than three years and 8% didn’t know when they were likely to return to usual profit levels.

One operator said: “Assuming venues survive the first few months of reopening and debt management, they will be paying this off for years.”

A Marston’s tenant pointed out it was tough to plan ahead for even small parts of their business, adding: “With a reopening date still not in sight it is difficult to make any firm plans.”

Rent for closure period

The tenant continued: “Marston’s wants rent [from me] for the closure period and we are going to find it difficult to find the money.”

However, another operator believed any form of comeback for the sector would be extremely difficult, saying “it will absolutely ruin the pubs”.

Many operators also claimed that significant rent deals – or even rent breaks and cancellations – would be the best way to secure the future of the trade.

There are currently two main campaigns calling for such action, including #NoPubNoRent, which wants rents abolished for the period of the lockdown, and #NationalTimeOut, which wants deferrals.

“I believe the Government should intervene and help all pubs by demanding that all rent for this period of closures should be wiped out and to tell all insurers to pay all loss of earnings claims as this is recoverable from the stock markets for most insurers,” another operator said.

And despite such campaigns gaining traction, more than three quarters (78%) of pub operators asked in the poll said they hadn’t agreed favourable rent terms with landlords.

Breaking it down, just 12% of operators had agreed favourable rent terms, 60% said they had not and 28% said talks were still ongoing with landlords.

We should not have to pay rent

One operator commented: “In an industry where we didn’t choose to stop trading – we were forced to close by the Government – we should not have to pay rent, we should get subsidy in lieu of rent from the Government.”

And another said: “I can’t foresee landlords offering help until the [Government] grant money has gone, [that’s] probably too late for lots of tenants by then.”

Meanwhile, Prime Minister Boris Johnson this month said some parts of the hospitality sector would be able to reopen no earlier than 4 July.

Many industry bosses have called out against the steps, claiming it has to be “all or nothing” because many pubs would not be able to survive operating under social distancing rules.

However, 2,068 hospitality bosses from across the trade – including pubs, bars and restaurants – indicated what they would do to ensure staff and customer safety once they are allowed to reopen and operate under social distancing rules.

Operators said they would provide or put in place:

  • Increased and visible cleaning – 14%
  • Sanitising stations – 14%
  • Limited customers – 12%
  • Face masks for staff – 10%
  • Table service – 10%
  • Limited menu – 9%
  • Don’t know/follow Government guidance – 9%
  • Contactless ordering – 8%
  • Temperature checks on people – 5%
  • Perspex screens – 5%
  • Disclaimer for customers – 2%
  • Face masks for customers – 1%
  • Other – 1%

Related topics: Legislation, UnitedWeStand

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