London’s Pubs and Restaurants Aren’t Out of the Woods Yet
(Bloomberg Opinion) -- Even with many people still working from home, long lunches out in the City of London have come back into fashion. Fortunately for diners and for businesses, Monday marked the next stage of England’s reopening, allowing indoor dining and drinking. As the rain fell, some restaurants in the Square Mile could once again offer shelter inside.
But business at the City’s eateries still remains a shadow of pre-pandemic levels. And with worries about the India variant spreading across Britain, the danger is that this is as good as it gets for the hospitality sector.
The next phase of the country’s reopening begins on June 21 when all legal restrictions on social contact are due to end, perhaps even the need to stay at least one meter away from other people. Should this date get pushed back, it would be yet another blow for beleaguered pubs and restaurants, many of which are running below capacity because of social distancing rules.
The resumption of indoor gatherings is still a milestone for England’s recovery. Theaters, cinemas and museums were finally able to open their doors again. Group yoga and dance classes can take place inside gyms. Indoor drinking and dining can replace having a pint outside in the cold. In the first phase of unlocking, from Apr. 12, just a third of Britain’s pubs, bars and restaurants were trading, according to hospitality data provider CGA and consultants Alix Partners. Pubs benefitted most since they were more likely to have outdoor space where groups could gather.
Being able to eat inside will make a much bigger difference for restaurants. Along with coffee shops and in-store cafes, they should now get a bigger slice of customer spending. Restaurants may also benefit from Brits vacationing close to home, as hotels once again accept leisure travelers and as the options for international travel remain limited. (There are only a handful of countries on the U.K.’s “green list” allowing Brits to travel without quarantining upon their return.)
But the hospitality industry is still far from back to normal. Rules such as staying at least one meter away from anyone not from your household limits how many people a pub or restaurant can serve at a given time. Parties of more than six are still banned. Operating below the maximum capacity will continue to weigh on sales and profits. According to UKHospitality, the trade body for the sector, even with indoor options, its members think sales will be just over half of those achieved in May 2019.
So the easing of all restrictions on June 21, as envisaged by Prime Minister Boris Johnson’s roadmap out of lockdown, is crucial. The big worry now is whether the India variant will change things. As my colleague Therese Raphael has noted, there are reasons to be hopeful that the country can avoid a third Covid wave. Over two-thirds of the population has received a first dose of the vaccine and there’s more rapid testing.
Business Secretary Kwasi Kwarteng told Sky News on Monday that it was still “very likely” that all limits would be scrapped next month, but he urged Brits to stay “measured and cautious.” A review of social distancing necessary for the June 21 landmark may be delayed.
The uncertainty will take a toll on already overstretched businesses. With just over a month to go, pubs and restaurants need to start preparing now. That means bringing staff back from furlough, and in some cases recruiting more workers, as service employees may have moved to other jobs or returned to Europe. The problem is particularly severe in London, where restaurants are reporting staff shortages.
The resurgence in Covid cases in parts of the U.K. may also dent people’s confidence about going out and about again. So far, consumer spending has been strong. Pent-up demand has been unleashed for everything from fashion to summer holidays. If the roadmap to reopening hits a snag, it won’t just be the hospitality sector suffering, but the whole consumer economy.
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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