Reopening post COVID-19 could be worse than lockdown months for many UK restaurant operators

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April will see the furlough scheme come to an end and allow customer-facing outlets such as cafés, restaurants, and pubs to reopen. While this may seem like a saving grace for the UK restaurant sector, which has plummeted from *1£32.2bn in 2019 to £21.8bn in 2020, Chancellor Rishi Sunak’s warning of a ‘double-dip’ recession indicates it will not be the economic relief many hope for and expect. With the UK‘s unemployment rate forecast to stand at *25.5% in 2021, independent operators that rely on the furlough scheme to stay afloat will have a turbulent road ahead, writes GlobalData, a leading data and analytics company.

Frederick Diamond, Consumer Analyst at GlobalData, comments: “The easing of lockdown laws will force many businesses that cannot afford to replace the furlough scheme to close. Job losses will likely increase, as businesses being kept afloat by subsidized wages will finally have to make some tough decisions to survive.”

Although the UK restaurant sector value is forecast to show robust *122% growth this year to  £26.6bn in 2021, full recovery to pre-COVID levels is still a long way off. This is also reflected by weak consumer sentiment, as GlobalData’s COVID-19 recovery tracker shows that *350% of Brits are ‘extremely concerned’ about their country’s economic situation – with a further *339% being being ‘quite concerned’. Only *32% reported being ‘not concerned’ at all.

Diamond continues: “A cautious consumer base means less cash splashing in the foreseeable future, with consumers likely tightening their belts as they grow ever wearier of the repeated extensions to lockdown laws, and the prospect of job losses ahead. Consumer goods generally will be massively impacted in the context of widespread job losses from the service sector. With its millennial-skewed workforces, we could be in for a rise in youth unemployment upon the closure of foodservice and hospitality outlets; meaning luxury consumer products marketed towards the millennial cohort will take a hit, as their target market becomes more cash strapped.

“Five months on from the Eat Out to Help Out scheme, we’ve reached the point where British business is growing impatient for further government help. Only this week, Marston’s chief executive, Ralph Findley, made public calls for a business rates holiday and a cut in VAT, as he expects pubs to be closed until March. Whatever form it may take, the UK economy looks to be in need of a stimulus, as many small and medium-sized businesses brace for further hardship ahead.”

*1 GlobalData’s Foodservice: Chain vs Independent Market Data Analyser

*2 GlobalData’s COVID-19 Executive Briefing – 16 December, 2020

*3 GlobalData’s 2020 COVID-19 Recovery Tracker – UK – Week 11, Published December 9th, 2020

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