PUB AND RESTAURANT MARKET TRENDS
The hospitality sector has been one of the worst hit by the COVID-19 pandemic. Yet reassuringly against this backdrop, we continue to see an uptick in market activity.
The government has offered support to the sector through various initiatives, including the Coronavirus Job Retention Scheme and an interest free business loan scheme amongst others, in an attempt to mitigate the economic impacts to the industry caused by the lockdown and forced closures of venues between March – July 2020.
The Chancellor, Rishi Sunak, provided further confidence and support for the sector with a temporary reduction in VAT to 5% (excluding alcoholic drinks) and the Eat Out to Help Out Scheme, where pubs and restaurants were able to offer a 50% discount on Monday to Wednesdays throughout August.
In September is was announced that the temporary VAT cuts would be extended until 31 March 2021, a new Job Support Scheme would replace the furlough scheme ending on 31 October, and an extension to repayment times for loans taken out under the various emergency government loan schemes, known as the Pay as You Grow flexible repayment system would be available to businesses, to offer respite through the winter period.
Operators are focussed on reopening and providing a safe environment for customers in line with the government guidelines and regulations. Pubs and restaurants continue to open on a weekly basis, with sales following an upward trajectory, albeit from an initial low base. Disappointingly for the sector however, the regulations now include a 10pm closing curfew, following a spike in virus cases. This is a concern for operators, in particular the nightclub and late-night sector, who face no clear guidance as to when they can reopen.
There are also areas which continue to face challenges, with city centres remaining quiet due to office workers either working from home or remaining furloughed. In particular, the casual dining sector has felt the brunt of this, with hardly a day going by without another restaurant group entering into some form of restructuring process.
Additionally, whilst the Government’s Code of Practice for Commercial Property Relationships during the Covid-19 Pandemic provides much needed guidance for landlords and tenants engaging on the issue of rent, it is feared that without further support or intervention there is likely to be a wave of litigation when the moratorium on forfeiture proceedings expiries at the end of the year.
Reassuringly, we continue to see an uptick in market activity against this backdrop. Notably, there is particular interest in community-based operations; those pubs and restaurants which have accommodation and those which are located in rural areas, as customers seek staycations in the UK and short breaks, and with many buyers seeking lifestyle opportunities. All this is reflected in the Christie & Co Buyer Registration Index which shows a 64% increase in buyer registration for pubs and a 67% increase for restaurants since the initial easing of lockdown restrictions. This increasing interest has translated into transactional activity with 133 deals being agreed by Christie & Co on hospitality premises alone since the beginning of April.
Managing Director – Pubs & Restaurants
T: +44 7968 004 550