2020 Full Hospitality Sales Report

2020 Full Hospitality Sales Report

2020 saw revenue decline of 51.38% overall, characterised mainly by a 98.3% decline in Q2 driven by lockdown 1. In the first two months of the year, prior to the effects of the pandemic, revenue growth was 6.6%. As pubs and restaurants opened up on the 4th July, consumers were hesitant leading to low demand levels and revenue was down 50.9%. Overall London was more affected, at a revenue decline of 56.0%, whilst Non-London performed better, at a decline of 50.2%.

The past year has been a tough one for everyone, and we just want to say thank you to you all.

S4labour has supported it’s customers with repeated 50% discounts throughout the pandemic.

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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.

Hospitality Like For Likes bounce back in August

Hospitality Like For Likes bounce back in August

Analysis from S4labour shows that hospitality like for like sales in August were flat, down just 0.4% compared to the same month last year. The Eat Out To Help Out scheme had the desired effect with those sites that were trading showing like for like growth in food sales of 22.2%, while drinks sales were in decline of 16.2%. The offer of a government supported meal helped to increase consumer confidence and has provided the lifeline that hospitality required. In July we saw like for likes down 30% and at this level many hospitality businesses would have been making a loss.
 
Outside of London performed better than London, with 4% growth compared to 19.5% decline. This is a reflection of the impact of people still working from home and it is likely that all urban areas that rely on a population of people working in nearby offices will be suffering. We are starting to see more organisations bring people back to their offices but this will take time and is unlikely to return to pre-pandemic levels.
 
Richard Hartley commented “EOTHO clearly did a job in restoring consumer confidence. There were some great sales and this suggests that the message has got through to consumers that the hospitality sector is very much open and very much safe”

Labour Ratios

Labour Ratios

S4labour release labour percentages since lockdown ended

 Short story

 Industry Labour ratios increase by 10% in first month of trading as operators get a handle on new ways of operating and lower sales levels. Analysis from S4labour has shown that the labour ratio in July (from the 4th to the 31st) was 41.1% as compared with 30.9% in 2019. Richard Hartley, Chief Product Officer of S4labour commented “For the hospitality industry the last 10-20% of sales produces all of the profit, and so with the sales levels in July it will be hard for operators to make money. The added increases in labour will make that even harder. The change in consumer behaviour may well be with us for some time and those who adjust their labour model quickly and smartly will win the confidence of the customer, and therefore grow sales, and also enable them to manage costs appropriately through this very challenging time.”

Full article

S4labour, the labour management experts, have conducted a full review of labour costs for July since the industry re-opened on 4th July. This data only includes sites for days that were open from July 4.

In the first 7 days after lockdown the industry was running at an average labour cost of 65.9%. Sales were low and staff were starting back to work, getting used to new ways of working and doing their best to give customers reassurance that they were operating in a safe manner. This will have left nearly every operator making losses.

As the weeks have progressed this ratio has improved. Week two ran at 53.8% and week three 43.1% , with the final week in July running at 41.1%. This labour ratio compares with a ratio of 30.9% for the same period last year and therefore reduces industry profitability by a full 10% pts against the same period last year.

There are several causes for this:

1 – Lower sales

The lower sales levels have caused an increase in the labour ratio of a massive 6% points. This shows how vital incremental sales are to the industry and over time operators will need to rebase their rotas if sales remain at a lower level.

2 – A less productive business

Business have become less productive because of more outside service, more at seat service and Covid measures on cleaning and staff distancing, all of which have led to a decrease in productivity which S4 estimates to be 10-15%. And therefore accounts for a 3% pt increase in labour ratio

3 – VAT

Operators have taken different approaches with how to treat the reduction in VAT. For any that have chosen to not pass on the price reduction to customers this will have helped them to offset some of the other challenges. This will see an increase in productivity, as measured by sales per labour hour, of circa 10%.

4 – Sales uncertainty and volatility

When sales are uncertain and more volatile then typically more team are scheduled to cover sales that might not materialise. Slack, a measure of non-productive hours as measured by S4labour, has increased by 5%.

5 – Staff getting back up to speed and training

The industry has faced the double challenge of having both to re-train and re-energise staff as well as train new staff, and this will have undoubtedly contributed to the additional cost in July. While the government have offered to pay for training through furlough, less than 50% of businesses are using this facility. This is in part due to the challenge of determining what is, and what is not, training in the way we run our industry.

To summarise therefore the increase in labour ratio is driven as follows:

Sales decline                           +6%

Productivity decline                +3%

VAT change                             -2%

Sales uncertainty                    + 1.5%

Staff training                           + 1.5%

Total                                        +10%

Richard Hartley, Chief Product Officer of S4labour commented

“For the hospitality industry the last 10-20% of sales produces all of the profit, and so with the sales levels in July it will be hard for operators to make money. The added increases in labour will make that even harder. The change in consumer behaviour may well be with us for some time and those who adjust their labour model quickly and smartly will win the confidence of the customer, and therefore grow sales, and also enable them to manage costs appropriately through this very challenging time.”

 

For further information on this story please contact Richard Hartley, Chief Product Officer

richard@s4labour.co.uk

07766698442

Re-opening  Sales Figures

Re-opening Sales Figures

Like-for-like sales down 30% year-on-year in first full week of trading since regulations ease:

Last week we reported that like-for-like sales were down 33.6% year-on-year in first weekend of trading since regulations eased, this week we can report that the week that followed so called Super Saturday, were down 29.8% compared to the same week in 2019.

The research uncovers a split in the performance of sales of drinks and sales of food. Sales of drinks were down 21.3% while sales of food down 40.0% compared to the same week in 2019. While the figures had very little deviation when comparing sites that were inside and outside of London, the capital performed slightly worse on sales of food, down 43.0% (compared to 40% down nationally) while sales of drinks inside London, while still down, were only down 18.7% (compared to the national decline of 21.3%).

Analysis.

July the 4th 2020, the day the hospitality industry was allowed to reopen their doors to customers in England after been forced to close as a result of the Covid-19 pandemic. Not every operator decided to reopen and those that did, did so to mixed pubic press on the rights and wrongs of them doing so, a raft of new government guidelines and an unknown level of public appetite to return to eating and drinking out. Anecdotally, operators had relatively low sales expectations from the opening weekend and many would have been encouraged by sales that were up 13.3% in comparison with the weekend before lock-down (14th
and 15th of March), albeit down 33.6% year-on-year.

The most notable trend from the following week including the weekend was the continued decline of food sales. S4labour Chief Customer Officer Sam Wignell said: “In these very early days of reopening, it is clear that social distancing is going to prevent food led business from serving the same number of guests they previously would have, explaining some of the reason why food sales have declined more severely than drinks. S4labour Chief Product Officer Richard Hartley said: Huge efforts have been made to make eating and drinking out safe, this has inevitably had an effect on capacity. We are also seeing some degree of people dipping their toe back in the water with a drink out, perhaps holding off for a period before going out for a meal.