Peter Backman Weekly Briefing Report - w.e 23rd August 2020
Peter Backman's insight
It seems to me that most of the comment about the current state of the foodservice sector has focused on the infrastructure – the numbers of businesses that have failed, the decline in sales, the redundancies and so on. This all goes under the heading of the supply side. But the future, as always, depends on the consumer – the demand side. So, what does that future look like? We have the next few months to get through – maybe longer, before we can start to make assumptions. There is the potential for further waves of covid for example. Nevertheless, I think there are some factors that we should be looking out for.
We can probably speculate, fairly accurately, that consumers generally will be poorer. They will have drawn down on their savings, they may be out of a job, or in a job but earning less. Of course, this is not true of everyone. Some will have improved their financial position and prospects; others will have seen their prospects diminished far worse than they could have imagined only six months ago. Overall though, consumers will have less money. And they are likely to be significantly more aware of the need for cleanliness, safe distancing and other factors with a social dimension.
The ways consumers live their lives will change. I don’t go along with the school of thought that says the world of foodservice has got to completely change its way of thinking about London because London is dead. There are far fewer tourists, more people working from home and fewer shoppers. The same is true of Paris, New York and all major cities. But the city is an essential way of the world, and London, like all other major cities will be back. And it will have changed in many ways – some very large but many of the changes will be noticed by only a few.
It is possible to identify many other changes like these that define the line between what went on before covid lockdown to what happens from here on. And here, to my mind, is the interesting thing. The future direction of the foodservice sector will be driven by what happens in the spaces between the changes. Keep an eye on these gaps because they will point to the opportunities that will arise as we develop our futures.
The numbers
Every year, at this time, I update my detailed analysis of the UK hospitality sector – it’s an important context for the foodservice sector which accounts for about 40% of this £137 billion industry – and when you add in the alcohol served in pubs and hotels, it accounts for over half of the hospitality market. The rest includes spending on overnight accommodation, paying for entrance to cinemas and theme parks, watching football and a myriad other leisure activities. Hospitality and foodservice are intertwined.
Looking at the total hospitality numbers I am struck by the share that depends on overseas visitors – they accounted for almost 20% last year. This year they are gone – well almost. And another striking feature is the startling different ways that visitors from overseas spend their money on hospitality – compared with how Brits spend their hospitality pounds, at least in this country.
The evidence this summer from British holiday resorts – along the south coast, in the south west, on the Lincolnshire coast and elsewhere - is that Brits are spending their money – but overseas visitors are not spending theirs in London. That means that the “shape” of hospitality is different this year – and no doubt will be next year and quite probably the year after.
So one more challenge for the hospitality sector is how to restructure in order to plug the gaps opened up the loss of overseas customers who won’t be spending money with tour guides, shopping at Harrods, visiting the Tower of London, going to the theatre. British consumers who staycation will make up some of the difference, but they tend to spend less when on holiday in the UK, than people from overseas.
Meanwhile here are the latest numbers from the Huq Index and OpenTable:
The remainder of this Weekly Briefing Report contains a summary of financial, legal, and corporate activity in the past week.
Financial & Legal
- More than 2 million self-employed may be eligible for governments’ second £6,750 support grant
- One in nine employees still furloughed – two thirds of them are being topped up by employers
- Several academics claim evidence shows that people infected by coronavirus could
have lasting immunity
- New West End reports footfall down -59% vs last year; up 13% this week vs prior week
- Soho pedestrianised zone has reopened to 90% of its hospitality businesses
- Akbar’s restaurant in Manchester ordered to close by council because of “unacceptable scenes of overcrowding”
- Crosstown Doughnuts launches national next day delivery
- Eat Out to Help Out in first two weeks: taken up by 85,000 sites, 35 million covers, average about £5 per cover
- Hundreds of venues reported to withdraw from Eat Out to Help Out due to adverse reactions from some customers
- PizzaExpress to close 73 sites and lose 1,100 jobs
- Tasty has no plans to open 8 sites; plans to close 30% of its workforce
- Yo! Sushi to close 19 sites out of 69 and lose 250 jobs
- McDonald's trials delivery to car windows
- Wasabi to resort to CVA – 51 sites in the UK
- Greene King opens 60 pubs in central London – LfL trade is down -60%
- Greene King serves 1.9 million people in the first six days of Eat Out to Help Out
- Shropshire pubs warned about “non-compliant” gatherings
Hotels
- Hotel occupancy in UK at 45% in week ending 2 August – up from 42% in prior week
Leisure
- EasyJet Holidays cuts 30% of its staff
- Jet2holidays extends suspension of flights to Spain until end August
- Chief Medical office says children are more likely to be harmed by not returning to school than catching covid
- Italy closes nightclubs
- Spain pubs, bars, nightclubs closed
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