Hospitality industry loses 94% of sales over lockdown

Hospitality industry loses 94% of sales over lockdown

Hospitality industry loses 94% of sales over lockdown

Analysis from S4labour shows that through lockdown 2.0, hospitality sales in sites that were trading in England were 80% down on pre lockdown levels and 96.5% down year on year. It should be noted that on top of these figures, 32% of sites did not trade at all, so the actual cost to hospitality during the lockdown was 94% of revenue.

Takeaway sales were low during lockdown, indicating that for most sites it was not feasible or profitable to pivot business models.

Sales figures from the few days before lockdown indicate that consumer confidence in hospitality is high, and pent up demand will mean that the few days coming out of lockdown are likely to be busy.

Alastair Scott, Managing Director at Malvern Inns commented: “Most operators do not have the infrastructure or the business models to run takeaway sales at a profit and the government cannot expect the industry to rely on such sales for survival. As lockdown-esque restrictions linger further into December, it is not looking promising for an industry that relies on Christmas trading to get through the next year.”

December sales forecast

December sales forecast

S4labour downgrades hospitality sales forecast in December to -45% in wake of toughened tier restrictions.

S4labour have undertaken research to help operators forecast sales as lockdown 2.0 comes to an end and England and returns to the tiered system. Originally the research showed a relatively optimistic outlook, with the pre lockdown bounce indicating strong consumer confidence, however the recent announcements regarding a toughening of trading conditions for the majority of operators has significantly dampened the forecast.  

The research undertaken by S4labour has analysed a range of data sets including historic December sales uplift, the Welsh post lockdown experience as well as the impact of the three tiers on trading.

During any normal December, we would factor in a circa 40% month on month uplift in sales, however, for the majority of operators this year, the work parties and general public splurge requires a significant down forecast.

Welsh operators enjoyed a 60% uplift in sales coming out of lockdown 2.0 compared to pre lockdown trading, a figure that would have indicated operators across the rest of the country could be optimistic about the easing of Lockdown 2.0 next week. However, with Wales emerging from its lockdown in conditions similar to England’s tier level 1, few areas in England will see anything like this growth.  

By looking at the historic impact of the tiers on sales, and accounting for the increased restrictions in each tier, S4labour has concluded that operators in tier 1 could forecast a December that is 50% up on October sales this year, but still 25% down on December 2019. Those in tier two, whose trading conditions are much like those in the previous tier 3, can forecast sales that are up 10% up on October sales this year, down 45% on last year. However, those leaving lockdown and entering tier 3 are unlikely to see any month on month growth from October this year, with only a marginal uplift on November. For many operators in tier 3 opening will not be feasible, but for those who do, it is possible that they will see an 80% decline in yearly like for likes.

Chief Product Office Richard Hartley commented: “The lockdown 2.0 was bitter pill to take for many operators, but for many, there was an optimisms that we would emerge into a Christmas period with significant demand. The additional restrictions on trade and the volume of operators who are in tiers 2 and 3 have quickly evaporated any hope of a buoyant end to a terrible year for the industry.”

Lockdown 2

Lockdown 2

Take-away sales during lockdown 2

Analysis from S4labour shows that just 25% of sites have stayed open after lockdown, with 75% closing during the first week of lockdown. There is little variation between rural and urban sites, nor between geographical regions across the U.K.

Of those sites who have remained open, sales are on average 24% of pre-lockdown for the first week of trading, with food being 27% and drink being 23%, which shows a significant adjustment of the industry to the new environment. A glance at site specific data shows that venues offering pizza and other more typically take-away food are vastly up on other sites.

Alastair Scott, CEO of S4labour and Managing Director of Malvern Inns commented: “I am really impressed with how fast operators have adjusted their business to cope with the new environment, particularly as the rules were changing right up to the last minute.

At Malvern inns we are using this time to build things for the future that we may want to maintain as part of our new long term operations. This includes a takeaway offer; an off-licence and a village shop, as well as getting ahead and preparing for Christmas and even valentines day. But if we break-even during the lockdown we will be over the moon.”

 

 

 

Hospitality sales up 39.1% yesterday, versus -75% on the last day of trading in March.

Hospitality sales up 39.1% yesterday, versus -75% on the last day of trading in March.

Lockdown 2 versus lockdown 1

Analysis from S4labour shows that sales in the hospitality sector this week, Monday to Wednesday, were up 3.1%, 35.3% and 39.1% respectively, on last week, with tier 1 sites

up -9.1, 18.1% and 25.8% for each of the three days and tier 2&3 sites up even more at 25.1%, 63.4% and 59.3% respectively. This can only be described as a last rush to hospitality venues for a last visit before lockdown.

 

By comparison in the March lockdown sales dropped by 13.2%, followed by -45%, -60%, -65% and -75% in the days up to lockdown on March 20th when comparing with the week before.

 

Alastair Scott, CEO of S4labour and Managing Director of Malvern Inns commented: “I find the psychology of the second lockdown fascinating. Whereas in the first lockdown everyone wanted to follow government advice ahead of the lockdown this time the consumer reaction has been the complete opposite. This seems to demonstrate a lack of public support for the government actions. I suspect, or hope, therefore that when the industry opens up again it will be with immediate pent up demand rather than the rather timid excursions after lockdown no1.”

Extended Furlough

Extended Furlough

 

In Propel’s Friday’s Opinion I published our guidance on the Job Support Scheme (JSS) that was due to start on the 1st November but mentioned that the government website would publish further details before the end of October, assuming this might be refining some of the smaller details.  Unfortunately we got our Halloween nightmare – a second lockdown.

 

For our teams there is a lifeline in the extension of the Furlough scheme, with some slight changes. Our development team are now working round the clock to reverse the work we had put in place to cater for the JSS and revert to Furlough. We will be releasing an update to the software on Tuesday to reflect this.

 

So what do you need to know?

 

The scheme will operate for the month of November, after which the JSS will come into play (although don’t discount another change in plans). The Scheme will pay 80% of an employee’s wages up to a cap of £2500. The employer will foot the bill for NI, pension, holiday accruals and, if they would like to and are able to, topping up their staff’s wages. These are the same calculations that were applied in August.

 

The flexible approach is also continued, meaning that if an employee works then the employer pays for those hours and the scheme will cover the remaining hours up to their usual hours.

 

Eligibility has been extended to cover all employees that were on an RTI submission on or before the 30th October.

 

It is, therefore, assumed that for employees who joined your company and were not eligible for the original scheme will now be eligible, which will be a great relief to those concerned.

 

I am sure there will be further updates over the next week as the details are ironed out and we will keep you posted on these.