Cautious Return To Trading With Uncertain Consumer Demand Is The Key Concern

Managed pubs, restaurants and bars undertook a gradual re-opening at the weekend, with operators feeling both cautious optimism and anxiety about trading levels, according to the latest Business Confidence Survey from CGA and Fourth.

The findings revealed that 59% of businesses in England planned to reopen some sites this Saturday [4 July], while a further 18% intended to open during the following week. But, on average, operators planned to open only three in five sites during the first week back, and just a quarter (25%) plan to open all their sites initially.

When asked about reopening, consumer demand was found to be the primary concern for business leaders, with 84% listing it as their biggest or major worry. City and town centres also pose a challenge, with 75% of respondents expecting consumers to be reluctant to visit them post lockdown.

“After more than three months in lockdown, operators will be looking forward to welcoming customers back from this weekend, and the government’s reduction of required physical distancing to one metre has provided a significant boost,” said CGA group Chief Executive Phil Tate. “But excitement has to be tempered by huge uncertainty about consumer attitudes and trading, and it’s little surprise to see concerns about redundancies, closures and profits. While it’s pleasing that confidence is seeping back into the market, businesses will be anxiously waiting for the ‘new normal’ of eating and drinking out to emerge.”

Despite 83% of leaders stating they have confidence in their supply chain, the majority of businesses will reopen with reduced menus, with 82% of respondents stating they were cutting back food menus to core options, and 41% indicating they will be stripping back their drinks menu, with cocktails being the hardest hit category.

James England, Senior Vice President, at Fourth, said: “It’s incredibly positive to see sites reopening across England after receiving the green light from the Government. Understandably, there are concerns around the level of consumer demand, particularly in city-centre locations, where a number of support industries and office workers continue to work remotely. While it’s positive to see such strong confidence in the supply chain, we are actually seeing a bumpy ride ahead for operations as the supply chain remobilises under such challenging circumstances, which can only be lessened through proactive discussions with suppliers around revised menu item availability and delivery slots.

The exclusive Business Confidence Survey also reveals the scale of concern in the sector regarding site closures and job losses, with 67% of industry bosses believing they will have to lay off staff, rather than bringing them back from furlough – on average they anticipate cutting a fifth (21%) of their workforce.

Fears of widespread site closures also remain, although they have eased from earlier in lockdown. Now 43% of leaders expect not to permanently close any sites, up from 37% in April. On average, the data suggests that some 1 in 12 sites may remain closed for good.

But the survey points to some recovery in business confidence. The last poll in April found that a record low of 15% of leaders were optimistic about their business’ prospects over the next 12 months, but three months later that figure has doubled to 32%. The proportion feeling optimistic about the market in general has risen too, from 5% to 16%. However, both figures are still barely half the level of 12 months ago, which were at 58% and 30% respectively.

The survey also reveals that rent negotiations remain the most pressing challenge, with operators having only modest confidence in the government’s new code of practice for tenant negotiations.

Looking at the long-term impact of Covid-19, 44% of business leaders expect an increase in home delivery frequency post lockdown, with 55% listing delivery as a revenue stream they are prioritising. 51% of the respondents indicated that technology, in particular ordering apps, would be a priority for businesses moving forward.

 

Cautious Return To Trading With Uncertain Consumer Demand Is The Key Concern, Cautious Return To Trading With Uncertain Consumer Demand Is The Key Concern