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Closed pub (Photo: Dan Burton, Unsplash)
20 November 2020

Hospitality industry faces jobs losses and closures

United Kingdom | Trade bodies fear mass redundancies and permanent closure of venues due to the coronavirus crisis. It is believed that one in four pubs could go under, following a sector wide survey in October 2020 by trade bodies UK Hospitality, the British Institute of Innkeeping, and the British Beer & Pub Association.

Over three quarter of respondents said that they were already lossmaking, and nearly 50 percent of respondents believe that the restrictions in place will reduce their turnover by at least half this winter. The prediction for total business failures by the end of 2020 is now estimated to be more than one in four. Over 50 percent of businesses are expected to fail before the end of March 2021.

With the government extending its furlough scheme until 31 March 2021, it is hoped that the final numbers may be less dramatic.   

Redundancies and closures

Before the coronavirus crisis, the UK had about 40,000 pub businesses. But recently, pub company Marston’s announced that it will axe 2,150 jobs in its pubs. The pub chain Greene King, which was bought by Hong Kong billionaire Victor Li last year for GBP 2.7 billion (USD 3.6 billion), said it will close nearly 80 pubs out of its estate of over 1,000.

About 14,000 pubs belong to major listed firms like Wetherspoon, Young’s, Fuller’s, Marston’s, City Pub Company, and Mitchells & Butlers (M&B), as well as the unlisted Greene King, Star Pubs (Heineken) and others.

Wetherspoon, which was founded by the well-known Brexiteer Tim Martin, and operates almost 900 pubs with 43,000 employees, announced the first loss in its history in almost forty years. Sales slumped 30 percent in its past fiscal year (until end of July). Its share price has halved since the beginning of the year.

Media say that since the beginning of the coronavirus crisis, almost all listed pub companies (except Fuller’s) have raised capital by issuing new shares. This gave them more than GBP 4 billion (USD 5.3 billion) of new capital. Marston’s, like M&B, was already burdened with a lot of debt before the pandemic. The two were lucky to restructure their debt. M&B, which operates 1,700 restaurants and pubs in the UK, suffered a 35 percent drop in sales in the 51 weeks to 19 September, due to covid-19.

Lockdown and restrictions hurt small pubs most

Small and independent pub operators are finding it harder to raise money. They usually have little savings and, with poor business prospects, low credit ratings. About 23,000 pubs in the kingdom are run by individual operators or small businesses with a few pubs. The longer the crisis drags on, the more companies risk being crushed by rising debt, if sales fall.

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