Reopening of hospitality

 

By Tim Wilkinson

The 12th April 2021 marked Step 2 on the government’s Covid roadmap, giving us further possibilities of a less restricted life. Hospitality businesses were able to open to customers served outside. With non-essential shops and highstreets reopening too, the date was also something of a symbol of coming out of the pandemic in England. While this is welcome, change is not without difficulties. There are, of course, positives for food service businesses that are willing and able to reopen premises and serve customers outside. But beneath headlines about sky rocketing high street footfall and pent up demand, hospitality businesses and their suppliers, are negotiating a change that presents tricky questions about moving forwards.

 

Nervousness

To survive the last year, many food service businesses have found new routes to market and/or have rationalised their offer. For some casual dining businesses, takeaways or meal boxes have offered more than just a lifeline and have been developed into lucrative income streams, which look set to supplement income from restaurant diners going forward. The owner of pizza chain, Franco Manca, Fulham Shore for instance, are looking to expand and open new restaurants as takeaway and collection raise profits. Some food-to-go chains, like Pret A Manager, have started supplying supermarkets. Pret struck a deal to sell baked goods at Tesco’s, in March. Meanwhile, smaller, independent business have found new routes to market via coffee vans or by serving hospitals and key workers. For some, these changes of business model have worked well; others will want to return to pre-Covid practices as soon as possible. I understand from our Expert Panel that there is nervousness about the choices businesses have as restrictions lift. While shifting back to pre-Covid business models might be very welcome for some, it is not without risk. For smaller businesses the risk is greater and decisions about whether, and what, to change are more difficult. It seems likely food businesses will continue to need to adapt and be agile, but after an extremely challenging year, cash flow will be an issue, especially where additional investment is needed to reopen or where there are existing debts to suppliers.

There are questions and concerns about when to reopen businesses. Outdoor-only dining limits capacity so some businesses will choose not to reopen until they can serve enough customers to make a profit. While approximately 38% of licensed premises have outdoor space to serve customers, only 12% of casual dining restaurants do. There is regional variability too; outdoor space is highest in the South West where 51% of premises have space outdoors. But the Caterer reported that under a quarter of licensed premises in England opened for trade in the week following 12th April. Capacity limitations, mean some food businesses reopening in April and May will make a loss, despite being open (less of a loss than being closed, but still a loss). This has some financial benefits, and being partially open may raise business profile, but for some businesses, particularly smaller ones, when exactly to reopen will remain a difficult decision.

For institutional caterers, uncertainties remain around returning to the office and hybrid working patterns. What will office ‘rituals’ (coffee mornings, shared lunches and meetings) look like as offices reopen? How will hybrid working patterns impact the catering offer? The pandemic has raised levels of ‘at home cooking’, but might we see a future where institutional caterers could serve at home workers? We will have to wait and see. For the time being, pent up demand for casual dining seems to be in evidence. Perhaps the same will be the case when it is safe for a mass return to the office. Wholesalers have reported struggling to meet demand from hospitality and rising consumer confidence is a good sign for businesses, although there is a suggestion that we are witnessing a ‘K-shaped recovery’ where there is increasing divergence between consumer groups who have prospered over the last year and those who haven’t.

Finally, I thought it was interesting that two campaigns were in the news over the last few weeks about businesses supporting hospitality reopening. One was from wholesale, Brakes who launched their ‘Help for Hospitality’ Campaign cutting prices on 3,500 products, the other was Tesco’s national newspaper campaign encouraging its customers to ‘pop to your local if you can’ asking customers to support local pubs rather than go to Tesco’s. This continues a theme we’ve seen throughout the pandemic of food citizenship and support. Will this community spirit persist as we move into a post-Covid summer?

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