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.”

The effect of the curfew on hourly sales

The effect of the curfew on hourly sales

Analysis from S4labour shows that hospitality sales are 18.27% below what they were before the curfew, comparing week 37 & 38 to week 40 & 41 (before and after curfew).

When we look at the 18.27% decrease broken down per hour (graph below), each hour has been impacted which reflects the overall industry slump; a fall in consumer confidence since the curfew. The hours from 6am to 6pm are down on average 16.1%.

A noticeable impact has also been shown in hour 22 (9pm to 10pm) as it is down almost 40%, indicating that the curfew has not only has an impact after 10, but the run up until the time of closure. The place must be cleared by 10, and most people are likely to head home within the hour.

Futhermore, when you look at the food and drinks split between hours (below), it can be seen that food has been hit harder than drink. This is a reflection on a few things. Firstly, most places are unable to offer a second dinner sitting: whereas previously there can be an early, 7:30 sitting, and another can be fitted in later, this is now not possible, therefore food sales are heavily diminished. Secondly, if everyone has to be out by 10pm, it does not offer much opportuity to sell food right up until that time. No one wants to rush their evening meal, but ask someone to squeeze in a last drink at 9:30 and they will not say no.

Richard Hartley commented: “Overall the curfew has impacted sales, perhaps just when the industry was starting to get back on it’s feet.”