Recent research conducted by Lumina Intelligence has found that the UK eating out market was expected to make a full recovery by the end of 2022. By the end of 2021 the UK eating out market was expected to grow by 33.4% to £63.6bn and expected to continue growing by the end of 2022 to £91.9bn just over the pre-pandemic levels of £91.3bn. This data has been based upon all restrictions coming to an end on 21st June. However, it has now been confirmed that the current COVID restrictions will be extended a further four weeks which is likely to have a significant effect on the recovery of the eating out market.

 

Could the UK hospitality sector suffer from long economic COVID?

There are concerns that the hospitality sector will suffer from long economic COVID which are likely to be emphasised due to the extension of COVID-19 restrictions across England. The UK Hospitality chief executive, Kate Nicholls, gave a speech in the House of Commons on 7 June which highlighted the impact that forced closure and strict trading conditions was having on the hospitality sector. According to Nicholls’s evidence, only 40% of hospitality businesses are currently able to operate profitably.

The average monthly costs of running a hospitality business are between £10,000 – £20,000 whilst average government support is £3,000 per month. This has left hospitality businesses with average deficits of £7,000 to £17,000 per month which has contributed to the industry’s rental debt exceeding £2bn. Nicholls has called for landlords to split the debt with businesses and write off 50% of rent debt for periods of forced closure.

Following the news of the extended restrictions the government will most likely be under pressure from business leaders in the hospitality sector to deliver further financial support.

 

Conclusion

To conclude, the extension of the COVID-19 restrictions across England has put the expected recovery of the eating out market on hold. This means that hospitality businesses will face at least a further four weeks of strict trading conditions. This decision by the Government will put them under more pressure to deliver further financial support to the hospitality sector with some unable to trade profitability in strict trading conditions.

How can we help?

At Hawsons we have a dedicated team of leisure and hospitality accountants at our offices in Sheffield, Doncaster, and Northampton. 

As the sector continues to become ever more challenging, with changes in fierce global, nation and regional competition leading to unrelenting pressures to maintain margins, it is more crucial than ever to seek sound and proactive advice.

Free initial consultation

Richard Burkimsher

Richard Burkimsher

Partner, Northampton

01604 645 600

[email protected]

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