Winter Economy Plan ‘does not go far enough’ to save venues, warns City Pub Group boss

UK hospitality business City Pub Group lost £3.5 million in profits in the first half of 2020 after pubs, bars and restaurants were forced to close for almost four months.

Clive Watson, City Pub Group’s Chairman, warned the Chancellor’s Winter Economy Plan will not save the hospitality sector. (Photo: City Pub Group)

The company said in its interim results that 37 of its 48 venues have re-opened since lockdown was lifted on 4 July, but revenues are down 20% compared to the same period last year.

Chairman Clive Watson revealed the company made a £3.5 million loss in the 26 weeks to the end of June, compared with a £1.9 million profit in the first half of 2020. The estate is now being appraised for “alternative use” which could mean excess space such as upper floors at some venues will be sold off for residential use.

The group made revenues of £12.1 million in the first half of the year, less than half of the £27.1 million generated last year.

Despite the bleak picture, Watson said the sales progress since July was “encouraging”, while the overall balance sheet is “extremely strong” given the circumstances.

Watson’s business was helped by a number of measures implemented by the Treasury to support hospitality venues that were forced to close, including the Job Retention Scheme, the business rates holiday and reductions in VAT payments. At one stage, just 2% of his staff were in work, with the vast majority on furlough.

The company benefits from having a large number of sites with outdoor seating so could accommodate the government’s social distancing measures.

“By opening the pubs which we knew would trade well, we were able to do so in a cash-positive manner,” he said.

City Pub Group also took advantage of its strong asset position by extending the Eat Out to Help Out scheme to September, and plans to continue offering substantial discounts to customers in October. Watson’s main focus will be preserving cash and streamlining operations to make his pub business viable during the pandemic, and in a position to grow after.

The next six months

With new cases of coronavirus soaring in the UK, hospitality businesses are set to face a bleak winter this year. Earlier this month, the government introduced a 10pm curfew for bars and restaurants in an effort to slow the virus’ spread, research from Public Health England showing that on-trade venues pose a far lower risk of transmission compared with schools and universities. Other reports also suggest the government could force pubs, bars and restaurants to close again for a short period of time.

Chancellor Rishi Sunak revealed a second round of support measures to aid the hospitality sector, which includes a new Jobs Support Scheme and a 15% VAT cut for the hospitality and tourism sectors. From 1 November, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand, but employers will pay the wages of staff for the hours they work

Watson warned that the new, less stringent measures will “result in significant job losses across the industry”.

“The part time subsidy is not suitable as a mechanism to save jobs in the pub trade, ironically one of the industries that it was designed to support,” Watson said.

“The current package of support simply does not go far enough to stave off immediate and permanent damage to an industry that pays significant tax and employs 10% of the UK’s workforce.”