Sausage Roll and Chips, Anyone? It’s Bleak News for British Pubs

(Bloomberg Opinion) -- British pubs and restaurants face a bleak midwinter.

With nearly all of England placed in the two most restrictive “tiers” of Covid rules, operators will see little difference between the past few weeks of lockdown and those leading up to Christmas — one of their busiest times of the year. Some 77% of hospitality venues are in Tier 2, according to UKHospitality, the industry’s trade association. Although they will be able to open, it will be with severe restrictions. Those in Tier 3 regions, including Manchester and Birmingham, will still only be able to offer takeaway. 

Thursday’s outlining of the new three-tier system that takes effect on Dec. 2 did bring some positives. For example, establishments in regions under Tier 1 and Tier 2 rules are allowed to reopen and can even trade for longer hours. Together with the reopening of non-essential shops, this should boost footfall to the country’s main retail thoroughfares where many casual dining chains are located.

But restaurants and pubs in Tier 2 cities such as London and Liverpool face other curbs on their activity. One is that pubs can only serve alcohol as part of a substantial meal. This is clearly advantageous for restaurant groups such as JD Wetherspoon Plc and Greene King, which place a strong emphasis on dining. Pubs that do offer food can, with a bit of creativity, find a way to sell substantial meals (sausage roll and chips, anyone?) But for those without food, it looks likely they’ll have to close.

The biggest blow for those in Tier 2 will be the banning of households mixing indoors. Family members who live together could still go out for a meal or a drink, but the ban will scupper many other outings in the run up to the holiday. Pubs and restaurants are already suffering from a dearth of Christmas parties. Now in most of the country, they will miss out on the business that comes from smaller gatherings of colleagues, friends and families. Unless the tiers are amended before the end of the year, many won’t be able to fully cater for New Year’s Eve.

Taken together, the 160,000 venues in Tiers 2 and 3 will see 7.8 billion pounds ($10.4 billion) of sales wiped out if restrictions remain in place for the entire month of December, according to UKHospitality. This will make trading profitably impossible. Even those few in Tier 1 will find it a challenge, given social distancing restrictions that limit the number of customers. 

British pubs and restaurants rely on December, which generates double the sales of a typical month, to bolster their annual revenue and profit. It usually compensates for the slower months of November, January and February. With already stretched balance sheets, it’s hard to see how many will be able to pull through the winter without sales recovering next month.

The tier system could still be amended ahead of Christmas. But with every day that ticks by, any reprieve will come too late for many dining and drinking chains.

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.

©2020 Bloomberg L.P.