Pubs Need Commuters and Soccer Fans
(Bloomberg Opinion) -- Many of England’s bars and restaurants have finally reopened for business after 15 weeks shut for the coronavirus lockdown. In East London, a Hackney hipster brewery, casual dining chains and even a pub in London’s much quieter-than-usual Canary Wharf all told me they had a solid start over the weekend. After being cooped up for months, drinkers and diners were desperate to get out.
Yet it’s too early to raise a glass to any kind of leisure recovery. There are many reasons people might choose to keep eating and drinking at home. They may be unwilling to put up with the new hassle of popping out for a drink or meal, or put off by potential price increases as pub and restaurant operators pass on the costs social-distancing measures. Add in rising unemployment amid an economic downturn, and everything points to difficult conditions going forward.
I spoke to a group of friends who would usually commute to the Canary Wharf business district each day, but are currently working from home. They met for brunch at the Figo Italian restaurant at the Westfield City shopping mall in Stratford on Monday morning, arriving early to avoid any crowding. They enjoyed their pizza, and the company after three months apart, but they said they were not sure they would rush out to do it again. They were nervous about catching the virus on public transport.
The flurry of business for many bars and restaurants may also have been flattered by the fact that not all establishments have reopened yet. Only about 45% of pubs and bars that could have reopened over the weekend did so, according to data provider CGA. It was a similar picture for restaurants, with about half reopening, according to trade body UKHospitality. Sales were down by 40%-50%, with city centers particularly quiet. In general, owners say restaurants will need 75%-80% of their pre-virus sales just to break even.
As the government tries to jump-start the economy while keeping the outbreak in check, consumers appeared willing to comply with Covid-19-related requirements, from providing their name and contact details on entering to slathering on hand sanitizer, ordering from QR Code menus and avoiding congregating outside of establishments while they waited to be seated at a reduced number of tables. It felt surreal to have plastic screens between diners, but people accepted it.
Yet businesses will probably have to pass on the extra cost of these measures to customers. Already, the discounts that were a feature of the casual dining sector have disappeared. In a low margin industry, prices may have to rise to make up for the lower sales volumes and higher costs. JD Wetherspoon Plc said on Monday that it was adding an extra 10 pence on each serving of beer, spirits and wine, while a meal would go up by an average of about 20 pence (25 U.S. cents).
That doesn’t sound like a lot, but for the pub group’s price-conscious customers it could be a deterrent to dining out especially as job losses mount. Already consumers have gotten used to drinking alcohol more cheaply at home. Even that 3-pound flat white starts to look like an extravagance when you can buy a decent pack of ground coffee at the supermarket for not much more.
It’s possible that some parts of the food and beverage sector just won’t recover, especially if living with the coronavirus means working from home remains widespread. Those establishments dependent on office workers and commuters will continue to find life tough. Sandwich shop Pret A Manger plans to close 30 out of its 410 outlets across the U.K., resulting in the loss of about 330 jobs. It has also begun a consultation on reducing headcount by about 1,000 elsewhere in the company.
The difficulties are apparent at the Westfield City mall. At Tap East, a micro-brewery and bar, the busiest times are usually weekdays between 4 p.m. and 6 p.m. as people pop in for a drink before boarding the train at the nearby Stratford International station, and when the West Ham soccer team plays at the stadium just a short walk away. Now, as matches take place without the crowds and many employees at nearby Canary Wharf continue to work from home, the watering hole must adapt to a different pattern of trade.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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