How Covid dealt £1.5bn hammer blow to hospitality sector: Pubs and clubs’ turnover fell 39% in May compared to 2019 while nearly 600,000 staff were on furlough – but restaurants cashed-in on £3.3bn from takeaway boom
- New report from Office of National Statistics shows damage wrought to sector
- Pubs hit worse than restaurants because of difficulties with providing takeaways
- Figures showed consumer spending in May was at 70% of pre-pandemic levels
Pubs and clubs’ turnover plunged 39% in May compared to 2019 in a more than £1.5billion hammer blow to the sector, it emerged today – as total takings across the hospitality industry reduced by a quarter despite a takeaway boom.
A new report from the Office of National Statistics, published today, exposes the damage wrought on bars and eateries by the pandemic, with 600,000 staff still on furlough in May, down from a peak of 1.65m last April.
Total hospitality turnover has increased to £6.9b in May 2021 – up from £1.2b from the same month a year earlier. This rose further to £6.9bn by May 2021 after restrictions were partially eased, although this was still around 25% lower than 2019.
Meanwhile, consumer spending in May was at just 70% of pre-pandemic levels, according to data from Revolut.
A new report from the Office of National Statistics, published today, exposes the damage wrought pubs and restaurants by the pandemic
Total hospitality turnover has increased to £6.9b in May 2021 – up from £1.2b from the same month a year earlier. This rose further to £6.9bn by May 2021 after restrictions were partially eased, although this was still around 25% lower than 2019
The revival was particularly strong for restaurants and food vans, where turnover in May this year was £3.3bn, five and a half times what it was in May 2020 but still lower than previously.
The reason that restaurants outperformed pubs and bars is likely to be because more of them were able to provide takeaway services and outdoor dining was permitted.
The 39% drop in turnover for pubs and clubs from May 2019 to May this year made them the worst affected part of the hospitality industry, representing more than £1.5bn worth of sales.
Pubs have been less able to offer a takeaway service when closed and have had partial restrictions, such as earlier closing times and substantial requirements around eating even when open.
Nightclubs have remained closed by law since March 2020 until reopening today.
As the country moved through the pandemic, the hospitality sector adapted to the changing restrictions, with the proportion of businesses temporarily closed falling from 81% in the spring lockdown to 54% in the early 2021 lockdown.
However, morale in the sector is still extremely low, with just 14% of pubs and bars and only 15% of licensed restaurants saying in June this year that they had ‘high’ confidence of surviving the next three months.
Median pay returned to pre-pandemic levels in June 2021 for the first time since September 2020, while the number of vacancies has also returned to the same level as before Covid.
There were 600,000 staff still on furlough in May, down from a peak of 1.65m last April
Consumer spending in May was at just 70% of pre-pandemic levels, according to data from Revolut
It came as Freedom Day was branded ‘disaster day’ by stricken businesses as self-isolating Boris Johnson faces fresh demands to dump farcical test and trace rules to quell the ‘pingdemic’.
The PM is marking the grand unlocking alone at Chequers after performing a comical U-turn from initially saying he and Rishi Sunak would dodge quarantine despite having met Health Secretary Sajid Javid – who has tested positive.
But the lifting of almost all legal restrictions have merely fuelled fears about spiking cases bringing the economy grinding to a halt, as more and more people are doomed to house arrest.
Experts estimate around 1.7million people are still self-isolating after being ‘pinged’ by the NHS Covid app or contacted by Test and Trace.
Many firms say their sites are having to open with reduced hours or shut completely because up to a quarter of staff are off as a precautionary measure – with scientists warning the situation could spiral as the UK faces up to 200,000 cases a day.
Job vacancies in the hospitality sector have now returned to pre-pandemic levels
PAYE Real Time Information showed median pay had also recovered from its January 2020 level
The Road Haulage Association has warned of impending chaos in supply chains, with chief executive Rod Mackenzie telling the FT: ‘Far from freedom day being freedom day, it’s going to be disaster day.’
In a key concession today, frontline NHS workers will be let off the rules to prevent hospitals having to cancel operations because of staff shortages. No10 has also indicated that they are looking at get-out for other key workers such as in the food industry.
But this morning vaccines minister Nadhim Zahawi appeared to dash hopes that the exemption could be ditched for the double-jabbed before August 16, as well as suggesting that the sensitivity of the app will remain the same for the time being.
Iceland supermarket boss Richard Walker accused the Government of ‘squandering the advantages’ of its successful vaccination programme by forcing double-jabbed people to self-isolate, adding: ‘We’re behaving like it’s the dark days of March 2020’.
ONS Labour Force Survey figures showed hospitality staff are still working fewer hours than their counterparts in other sectors
Humphrey Cobbold, the CEO of PureGym, which has more than 1.1million members in 287 sites, said: ‘We’ve been talking internally about living in the United Pingdom and it’s become a huge challenge for individuals and businesses’, adding his staff are ‘being pinged all the time’.
He added: ‘Up to 25 per cent of our staff in some areas have been asked to self-isolate. Through flexibility we’ve been able to keep sites open so far but it’s been a really close call. I think there is a different way to react to the pings for the double vaccinated and using lateral flow tests that would keep the economy functioning’.
Greene King pub boss Nick MacKenzie said: ‘It’s a problem and it could get worse. It is disruptive to the business. We had to close 33 pubs in the past week because of a lack of staff and across the industry we think it is one in 5 who have been affected by this and therefore it is causing us a real issue on a daily basis. We are having to have shorten hours in certain circumstances.’
He added: ‘We need clarity from government on how the app works and we need to move to a test and release scheme where people can take a lateral flow test every day and get back to work and some sort of normality’.
Morale in the sector is still extremely low, with just 14% of pubs and bars and only 15% of licensed restaurants saying in June this year that they had ‘high’ confidence of surviving the next three months
Mr Johnson and Chancellor Rishi Sunak had announced yesterday they would take part in a pilot scheme to avoid quarantine.
But amid widespread outrage from politicians, business leaders and the public they humiliatingly caved in within hours and revealed they would join the legions of people self-isolating – in the PM’s case Chequers until July 26, his country estate in Buckinghamshire.
They had faced accusations they were accessing a ‘VIP lane’ that was not available to workers who are having to isolate, bringing some businesses and public transport to the brink of collapse.
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