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ECONOMIES OF ALE: Confidence is a rollercoaster for pub operators in the time of Covid

The George of Harpenden, Hertfordshire

Pubs have been among the businesses most impacted by coronavirus restrictions, with thousands unable to open properly until the relaxation of rules around indoor dining. New figures from the ONS reveal how confidence among pub operators has been shaped by government decision-making…

When pubs and bars were told to close at the start of the first coronavirus lockdown last year, there were 38,870 sites in the UK employing 467,000 people. While funding schemes were introduced by the government to help keep businesses alive until they could resume trading fully, the series of lockdown measures have resulted in the establishments shutting up shop for months at a time.

Naturally, the changing confidence of pub owners can be closely tracked to the restrictions in place. Using the results of the Business Insights and Conditions Survey (BICS), the Office for National Statistics (ONS) notes that in October 2020 just 6% of landlords had “high confidence” that their establishments would survive beyond three months.

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By early February 2021, the proportion of “high confidence” had dropped to its lowest recorded level of 1%. In May 2021, however, the percentage of pub and bar owners who had “high confidence” in their establishment surviving the next three months passed 20% for the first time since November last year.

Pub and bar business confidence has been weak compared with all other businesses but is starting to improve

In the past month, there has been a revival of confidence, with the most recent data for early May 2021 showing 24% of pub and bar owners had “high confidence” about the survival of their business beyond three months.

This return of confidence could have been the result of the unveiling of the roadmap out of the pandemic and the subsequent reopening of hospitality.

While the return of “high confidence” has shown promising signs of recovery, the drop in the number of pub and bar bosses who felt “low confidence” in the ability of their business to survive the next three months failed to last.

That “low confidence” dropped from 63% in November 2020 to 3% by April 2021, but by early May 2021, had risen significantly to 19%. Confidence among pub and bar owners has been both considerably lower and less stable than that of other business owners.

Percentage of businesses who reported high, medium and low confidence of survival over the next three months, UK (2.11.20 – 16.05.21)

Furlough scheme has been vital for pub staff

Prior to the pandemic, employment in pubs and bars (particularly pub chains) was increasing. Given the interruptions to trade in 2020, it’s likely that staffing levels will have changed significantly.

The government’s HM Revenue and Customs Coronavirus Job Retention Scheme (CJRS) has been an important means of business support during the pandemic. It has enabled landlords to keep staff on their books while their establishments have been closed.

At its peak in the November 2020 lockdown, 91% of pub and bar staff were on furlough. This number has now decreased to 55%.

This compares with overall 8% to 15% of staff on furlough in all other businesses during the same period, indicating the heavier reliance of pubs and bars on the scheme.

The ONS highlights a downward trend of pub and bar staff on furlough since restrictions were lifted on beer gardens. Despite this, the percentage of staff that were on furlough has remained high. This suggests that where pubs and bars have been open, they have been operating with minimal staff.

The percentage of the workforce on furlough in pub and bar businesses is considerably higher than that of all other businesses

Not all pub and bar jobs will have been saved by the furlough scheme. In the weeks just after Christmas 2020, 12% of pubs and bars reported that it was likely they would make redundancies in the next three months. This number fell to approximately 4% by late February 2021. It is unclear whether this is because of increased certainty or because the redundancies had already gone through.

Percentage of workforce reportedly on furlough, UK, (19.10.20 – 02.05.21)

 

Run up to Christmas was financially difficult for pubs

The weeks leading up to Christmas are normally busy for pubs and bars, but December 2020 saw huge losses in trade.

The tier system, introduced on 2 December 2020, placed areas of England under specific sets of restrictions. Pubs and bars in areas placed under tier 3 and 4, the strictest of conditions, had to close. The tier system was replaced in England on 4 January 2021 by another national lockdown.

By mid-December 2020, more than 80% of pubs and bars recorded that their profits were more than 50% below what they would normally expect for the time of year, with that number soaring to 100% by late December 2020.

Profit losses of all pubs and bars were more than 50% lower than normal expectations for Christmas 2020

By late January 2021, pubs were still reporting a larger loss of profits compared with all other businesses for the time of year. However, those losses have recently started to decrease, with around 33% of pubs recording significant profit losses, because restrictions have eased since mid-April.

Percentage of businesses who reported profits had decreased by more than 50% of normal expectations, UK (19.10.20 – 02.05.21)

Tags : Office for National StatisticsPubs
Andrew Seymour

The author Andrew Seymour

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