A heavy decline in sales, and a 50% discount for S4labour customers for January.

Following a heavy decline in sales, S4labour writes to all customers promising 50% discount in wake of new low point for the industry. 

Analysis from S4labour shows that total hospitality industry sales were down 73.7% on last year for December. Food was down 63.7%, Drink was down 81.7% and Accommodation was down 71.4%. Given that December is usually hospitality’s busiest month, this is a hard blow for the industry.

To exacerbate the problem, New Year’s Eve sales were down by 97.8%, as all pubs and restaurants moved into Tier 3 or above prior to the 31st. The few takeaway sales that were left do not compensate for eating in sales.

In a communication issued today, S4labour has reassured all customers that they are “prepared to stand with them” shouldering some of the financial burden as new restrictions hit. All customers have been given a 50% discount on January’s invoices.

S4labour has offered the same discount to all customers during previous lockdowns and has always made available to those whose tiers had made it impossible to trade. However, as the vast majority of operators will have moved into tier 4, very few will be trading and almost none profitably.    

Sam Wignell, S4labour’s Chief Customer Officer commented: “As we enter the New Year, this is a dire time for our industry and it is the responsible thing to share some of the pain and to help our customers get to the other side of this crisis.”

Dec 2020 sales to date

Dec 2020 sales to date

 Analysis from S4labour shows that sales are down 64.3% year on year for Tier 2 venues, for December to date. As a result of the restrictions places on hospitality, food is down 55.3% and drink is down a significant 72.5%. Given that Tier 1 is a tiny percentage of the country, these Tier 2 figures are the best case scenario for the majority of the hospitality industry, most of which is now in Tier 3 or 4, and down over 90% year on year.

 

London has fared worse, down 71.1% year on year, while the rest of the country is down 61.9%. These figures in the capital are due to drop even further to full lockdown levels, given the recent announcements regarding further restrictions.

 

Richard Hartley, Chief Product Officer commented: “the everchanging covid restrictions continue to have a damaging effect on the industry as expected, and Christmas this year is now set to look even more uncertain than previously expected.”

Tenzo & S4labour – covid sales effect

Tenzo & S4labour – covid sales effect

Joint Research Between S4labour and Tenzo identifies 98% rise in takeaway sales, but has little impact on overall decline of hospitality like for likes. 

15.12.2020

Joint research from hospitality software providers S4labour and Tenzo the business intelligence specialists, reveals that despite a 98% year on year increase in takeaway sales during the first full week of trading since lockdown 2.0, eat in sales slumped 50% over the same period, resulting in a 46.7% overall decline in year on year sales, comparing last week with the same week in 2019.  The research by S4labour and Tenzo was done in conjunction with each other to highlight the plight of the industry and help forecast trends for 2021.

Taking a look at the whole Covid period between March the 20th to the 21st of December, the hospitality industry has suffered a sales decline of 56.5% on the same period in 2019, the majority of this driven by lockdowns and the Tier system. During the periods of the year with the least restrictions, between July and September, sales were down just 7.5% year on year.

Christian Mouysset, CEO at Tenzo, the business intelligence and forecasting platform for hospitality, commented that “Unfortunately, restaurateurs can no longer rely on eat-in sales. With changes to restrictions happening so often and at such short notice, the only way for restaurants to recoup revenue is to focus on diversifying their offering by focusing on the delivery and takeaway channels.’

Alastair Scott, MD of S4labour and Malvern Inns added “Covid-19 and the various restrictions on hospitality have been devastating. The innovation in take-away and the speed at which operators have adapted has been remarkable. While take-away will have helped some operators keep their heads above water, the model doesn’t work for many. News that London is going in to tier 3 this week will be devastating, for those who would not have been able to plan for such an abrupt end of trading. “

Sales by Tier, coming out of lockdown 2.0

Sales by Tier, coming out of lockdown 2.0

Tiers 1,2 and 3 down  30%, 39.2% and 77.8% respectively.

Analysis from S4labour shows that sales in Tier 1, 2 ad 3 venues are down 30%, 39.2% and 77.8% respectively year on year.  As we expected, the tougher lockdown restrictions have been disastrous for the sector, however there is also proof in Tier 2 that despite greater restrictions on average than before lockdown (most areas in Tier 2 came from either Tier 1 or 2 in October/November), that some consumer confidence is there. A lower post-lockdown effect can be seen than previously expected, as pent up demand for hospitality drives sales yet restrictions preventing households from mixing indoors curbs sales as the cold December kicks in. The new rules concerning eating are also affecting overall sales, as going out for a drink no longer becomes an option, and a trip out becomes more expensive. As expected food sales are down by less year on year at 18.9%, whilst drink is down 49.6%.

 

It must be noted that whilst these figures compare sites that are open; 25% of Tier 2 sites are still closed, and 91.7% of Tier 3 sites are closed. Take these venues into account and the overall figures are much worse.

 

Richard Hartley, Chief Product Office at S4labour commented:” We can fear that with these levels of sales that a lot of venues will struggle to be profitable. The number of sites not open shows just how catastrophic the current restrictions are for the industry. This is a time that hospitality normally thrives and many organisations rely on December revenues to get through January and February.”

The Future of Hospitality

The Future of Hospitality

The future of hospitality – we are part of the solution and not the problem by Alastair Scott

I am surprised the quote from Mark Twain of: “There are three kinds of lies: lies, damned lies and statistics” has not been used more over the past nine months during the covid-19 pandemic. Theresa May made a similar point when she said that policy should follow the evidence rather than the evidence be found to justify the policy. We all feel, at the moment, the hospitality industry is suffering from some combination of these two factors to try to either severely wound us or kill us off from a health lobby that likes to blame society’s problems on us. But with adversity there is always opportunity and I would like to suggest that, as an industry, we have two opportunities. The first is to consistently use evidence-based arguments with whatever we do and whomever we see. The second is to use the statistical richness of the past nine months to really test and prove wrong many of the negatives about the hospitality industry.
 
The immense value of statistics
It is amazing what you can do through statistics. The whole of my final year at university was spent modelling the spread of Aids, in which my tutor was an expert when Aids was a real danger to lives. Interestingly, from my college, we also had a lot of people progress to be decent journalists – all the ones I know studied English literature. I think this is why I see the world perhaps a little differently to others (some would argue not just a little) – where others seek the headlines, I seek facts and want to come to my own conclusions about the implications. But in a world of Twitter and mass competition for the headlines, the operating practice of too many journalists has become to exaggerate and to rush out the headlines without the necessary due diligence.
 
Closures continue
But the headlines are affecting us. The general population is starting to believe transmission does take place in our venues rather than understanding the greater risk in their own homes for the same activity. Not only is this affecting the cities where millions of people have changed their working and socialising practices but also in the towns and villages I frequent, in which I have seen hospitality venues close at an unprecedented rate. While, in theory, the market should have grown, operators have not survived because of the combination of forced closures and social distancing rules. And with Christmas in hospitality just about cancelled, VAT payments and loan repayments due from April onwards, and rates and VAT kicking back up, the future still looks bleak. But how do we make the best of the situation?
 
The use of science is the new norm
As an industry, I feel we have to move to a new way, and that is to produce more credible and better science than anyone else. In the past 12 months, we have had the best, controlled experiment we could have ever had. In the first lockdown, hospitality was completely closed, which allowed us to do lots of work on the effects of removing hospitality from society. We are now entering a phase where you can’t just drink in a pub, but only eat AND drink, and so we will be able to gather even more evidence. And the statistics might be easier in this phase now the rest of our society is running more normally. We can also, of course, even now get our own scientists to present the evidence on Test and Trace and the positive effects of a covid-safe hospitality industry on the spread of the virus. We should all ask our industry bodies to walk around armed with a scientist at every meeting because this is now becoming the new norm – giving that scientist a wealth of evidence to support the cases they make.
 
My hypotheses
I think there are several hypotheses we need to test to see what the mass of evidence says about them:
1. That the transmission of coronavirus is lower when people meet in hospitality than it is in the home because of the better adherence to rules and the ventilation in hospitality
2. That alcohol consumption goes up if you close pubs, as evidenced by the alcohol studies in the first lockdown
3. That obesity levels rise when hospitality closes, as again evidenced by the first lockdown
4. That hospitality, as part of web of social contact, plays a much bigger role in improving mental health than anyone previously understood and, in particular, in young people
5. That government rules are being broken on an increasingly frequent basis and the only way to manage this pandemic is to protect the vulnerable and let the rest of the population make their own risk assessments and get on with their lives
 
Of course, these hypotheses need testing to a greater degree than my limited search for evidence. There have clearly been other events that need to be carefully eliminated and their individual impacts understood. But this will only help to corroborate the evidence and give greater credibility to the end result, and some of the goals could transform our industry.
 
The goal
While hospitality has been treated shoddily over the past three months since the glory days of Eat Out To Help Out, our focus has to be on the long term for our industry as well as the immediate impact to try and rescue what has now become the most parlous state the industry has been in during my lifetime. This will be founded on changing entrenched government attitudes towards hospitality and developing a greater understanding of the total societal benefits. I, for one, am still hopeful the chancellor will understand the damage done and roll forward the VAT cut and the rates relief for at least another 12 months. While this will not save the many businesses that are now set to fail, it will breathe new life into hospitality, and I hope create a new wave of people in hospitality that recognises how talking, laughing, debating and just sitting near other people is something to be cherished and appreciated by society as a whole and not just us.
Alastair Scott is chief executive of S4labour and runs Malvern Inns
S4labour is a Propel BeatTheVirus campaign member
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.”