Hospitality sector challenges due to the Coronavirus
The hospitality industry currently faces a challenge, the likes of which it has not seen before
That is staggering in itself when you consider that in 2018 alone there were 1442 restaurant insolvencies. Also in that same period more than 900 pubs closed their doors for the last time.
COVID-19 is an acronym none of us who are living through it will ever forget
The loss of life has been horrific. The devastation visited to the economy will take many years to calculate. What is left of British business will be in a parlous state. Therefore, it could take many years to recover.
So what of the hospitality sector challenges? The hospitality industry employs 3 million people, and generates £72 billion for our economy. How does it open up and bounce back?
How will the restaurant and pub trade restart once the Government lift lock down?
There could well be a fundamental shift in our attitudes to nights out in crowded areas. Most importantly, this could last for many months to come, even with adherence to Government approved guidelines. It will, to a large extent, be up to the industry itself to find the solutions and work through the limitations.
Communication, collaboration and collective problem solving may be one of our best resources in this challenge.
How to overcome the hospitality sector challenges?
Firstly, it is highly likely that we will still be required to maintain a ‘social distance’ between ourselves for many months. For a pub or restaurant therefore, spacing between tables and drinkers will have to be engineered. This is, without doubt, a major hospitality industry problem.
Restaurant business problems
How do we overcome the hospitality sector challenges? We may have to utilise every other table in a restaurant to meet government guidelines. To achieve profitability in such circumstances restaurants might need to make various changes.
Restaurants may require:
- an amendment to opening hours
- a reduced, simpler to produce menu
- time limits on tables
- reduced staff numbers to minimise overheads
- price increases to add additional revenue to that lost with reduced numbers of diners
Austria is trying this approach in its hospitality industry with a suggestion that booking be a pre-requisite. Furthermore, restaurants will need to take significant deposits at the time of booking to overcome no-shows causing further losses.
Pub business problems
Pub owners might need to:
- firstly, offer table only service
- reduce numbers on each table
- introduce strict door policies to manage those coming in and out
- impose time limits on a stay to ensure those that require a pint can get one
- utilise simple timing devices
- timing devices could maybe give a limited amount of time and indicate how much longer remains
- ban drinking at the bar
- implement contactless payments
A similar scheme incorporating some of these elements is operating in Sweden. However, many establishments have chosen not to open as they could not make the model pay.
Access to wash room facilities could also cause cluster points.
Local Councils could help overcome hospitality industry problems
Many pubs have street access and pavements that could be utilised for outside drinking and eating. Councils could help this industry issue by facilitating the closure of non-essential streets. They could also waive the need and cost of applying for pavement licences. Vilnius in Lithuania has tried this idea.
This simple act could create a ‘European style’ café culture. However, the weather might not always be suitable and there may be storage issues. The idea could at least provide a further opportunity to increase turnover in what will be a financially perilous time though.
Suitable socially distant drinking and eating spaces could be arranged in pub gardens. It would again require table service to ensure people stay apart. Indeed certain establishments already run ‘at table’ apps to enable ordering and payment at the table. Perhaps this technology or something similar could become more widely utilised.
Whatever systems are implemented and however much costs are reduced we cannot ignore key issues. Most establishments are only marginally viable even when fully open. Many rely on their weekend trade to pay the bills and make profit.
If the weekend trade is not now spread through the week then any changes implemented may not be enough to save most businesses. Indeed many may take the view that it could be more costly to open up with reduced trade and increased overheads. Staying mothballed could be more appealing.
What are other business owners doing to overcome these issues?
You may wonder how other businesses are coping and what steps they are taking
You’re not alone facing hospitality sector problems. Opening up and sharing the challenges you have identified and the solutions you are exploring will help.
Moreover, this is a debate we all need to be engaged in. There are numerous forums through which to do this – now is the time to take part.
Professional consultants specialising in the sector can also be a valuable source of advice and guidance. Coping with a potential societal change in behaviour after COVID19 is going to take creativity and flexibility.
We may need to develop completely new business models to enable profitability in a post COVID-19 economy. The more we can all draw on each other’s expertise and insights, the better.
This article, written by Steve Thatcher, has recently been published in Caterer Licencee and Hotelier digital news.
Steve Thatcher is a non-practising solicitor of 25 years’ experience He is an ex-publican and personal licence holder. He currently practices as a business rescue and insolvency professional with F A Simms & Partners.
Steve works directly with numerous businesses in the hospitality sector and has first-hand experience of how COVID19 is affecting them.