Despite increased sales in August, primarily as a result of the Eat Out to Help Out scheme and rising consumer confidence, latest data from the Coffer Peach Business Tracker shows that restaurant and bar groups saw sales fall significantly in September.
Total like-for-like (LFL) September sales across the whole managed sector were down 20.3% compared to around minus 12% for August. The end of the Eat Out to Help scheme at the end of August, coupled with tighter Government-imposed restrictions such as the 10pm curfew in September, have undoubtedly had a significant impact.
Drink-led pubs hit hardest
Drink-led pubs were hit hardest in September, with total sales down 22.7%. The downward trend looks likely to continue, as the latest wave of restrictions this month means that pubs and bars in “tier 3” local lockdown areas can only remain open if they operate as restaurants.
For restaurant groups, performance was marginally better, with total sales down 19.6%, likely helped by the VAT cut on food and delivery sales. This performance was affected by there being only 72% of group-owned restaurant sites trading during September, compared to 96% of the country’s managed pubs.
As restaurants scramble to adapt, their delivery services have grown significantly, accounting for 10.4% of sales in September, up from 8.8% in August, and almost double the pre-lockdown level of 5.9% (recorded in February 2020).
An opportunity to adapt
In light of the challenges facing the sector, retail and hospitality expert John Farnsworth, comments:
“After a summer of increasing consumer confidence, the fall in sales in September is a blow for pubs and restaurant groups, and there is no doubt that the coming months could be very challenging for many businesses.
As the spread of new national restrictions advance across the UK, the winter months may see a stemming of recovery, force some businesses to finally let staff go, and others to wind-up operations completely – unless the sector is successful in its demand for sector-specific Government support and/or regional lockdown support.
There is an emerging “divide” in drink-led businesses between those willing and financially able to embrace food sales, and those that cannot; food sales have will become crucially important in supporting the managed sector as the 10pm curfew and table-service requirements proves to be an ever-increasing challenge.
This will be a challenging period, not least because its duration is an “unknown” – so key decisions about optimising trading, and the reserves needed to survive, are therefore speculative. Clearly, there is a long way to go until the market recovers to pre-pandemic levels but operators are showing immense and heroic determination and adaptability.
Businesses can still take advantage of government funding schemes, which have been extended until the end of November, and the expansion to the Job Support Scheme will could prove vital for those that can trade on. There is also hope of more support measures as the powerful lobbying groups spell out the situation to Government”.
As COVID-19 restrictions change almost daily, and financial and commercial uncertainty persists, it is more important than ever to seek timely advice.
Our Corporate Finance team are well-placed to help clients navigate difficult periods, helping businesses source the right support, and maximise the resources available. Please do not hesitate to get in touch.