I am sure the obvious parallels between coronavirus impacts on the UK’s population and its out-of-home food sector will not have gone un-noticed by readers of Propel. As coronavirus spread rapidly throughout the country in March and April it made large numbers of us sick and at its peak put more than 3,000 of us in hospital every day. It’s sad to note in total more than 40,000 people, many of whom had pre-existing conditions did not survive. 

As the pandemic pans out, we are seeing the impact of zero revenues since late-March have a similar impact on our businesses. Many are now very sick, and in spite of treatment via the Coronavirus Job Retention Scheme and the Coronavirus Business Intervention Loan Scheme many of those with pre-existing commercial weaknesses are not going to survive. At the same time others, with strong balance sheets and money to spend, are ready to invest for the post-pandemic era, as there will surely be a thriving out-of-home food and drink sector in the future – eventually. A vaccine, if it is found, will be a vaccine for our sector as well as humanity as a whole.

The pandemic has started fires in every corner of our world, but it seems to me the prevailing issue in our sector in the year ahead will be cash. Once the two-metre rule and the 14-day quarantine barriers are removed (as they surely will be) the acid test will be: “Do consumers have enough cash to deliver positive cash flow for our operators?” Those for whom the answer is no will ultimately run out of cash.

But the squeeze on cash is not confined to operators alone. Suppliers lost millions in the few weeks between 9 March and 27 March as demand suddenly dried up, leaving stock rotting in warehouses, as more trucks disgorged even more goods. Since then orders of supplies in foodservice have been at 5% to 10% of prior year. 

Some suppliers have hunkered down, taken the handouts on offer and are trying to ride out the storm. Others have been using the interim period to innovate. Many wholesalers, manufacturers and even growers have diversified into direct-to-consumer markets, some have struck lucrative public sector contracts where cash flow is more secure, and others have struck new relationships within the major retail channels. Some of these are lower margin than foodservice, but stability of cash has been a key driver, and some for this reason may choose not to return. In recent weeks we have seen the early casualties in our supply markets such as Adelie Foods and Mash, and there will surely be many more ahead.

And this is the heart of the challenge. When times are good everyone in our value chain gets to feast well from the same table. Cash flows easily through the chain, and risks are relatively low as a result. But the lock-down has changed that and the recession that is now emerging is already creating a new dynamic. Many operator balance sheets are now showing an alarming lack of liquidity, and suppliers are working harder than ever to spot customers at risk of failure. When a supplier’s balance sheet is strong the temptation to take a risk on a customer is strong too, but when the whole value chain is squeezed on, cash credit terms fall and pricing generally rises. 

And there are further challenges. Order volumes will be at perhaps 40% to 70% of 2019 levels for some time. Wholesale prices factor in the cost of distribution, but when that cost is not fully covered at the historic price the choice is a stark one – put up prices or lose money.

At a very rough estimate our sector’s weekly orders on suppliers fell in March from roughly £700m to about £40m. The impact on the retail sector was enormous, with empty shelves and lack of choice commonplace. In the weeks ahead that number will return to somewhere above £300m. The risks for suppliers, particularly for fresh product will be large. Even if product is available in the market (which is a risk in itself) order too little and operators will get short supply, order too much and product become unsaleable.

We are already seeing the impacts of these challenges in our supply markets, and the emerging outcomes are likely to get stronger between now and the end of the year, as supply markets get used to our new normal:

– Shorter credit terms

– Reduced product ranging

– Minimum order values

– Fewer deliveries

– Reduced stock availability

– Higher prices

As a sector we have an amazing supply chain, and one that we perhaps in the past have taken for granted. But these new dynamics present risks for operators compared with pre-pandemic:

– Will my supplier still be there?

– If yes, are they at risk of failure? 

– Even if they are not at risk can I rely on them for continuity of supply?

– How can price increases be mitigated?

– How secure is my supplier’s upstream supply chain?

– Will my own cash flow challenges leave me capable of supporting their needs?

It’s perfectly understandable many operators are focusing on their reopening plans right now. But in my view the wise ones will also be paying their supplier bills and communicating hard about their requirements, the commercials and the risks that must be understood and managed for success to be delivered. 

The British pub is the community hub for people all over the country. It’s a lifeline for the lonely and the elderly. It consistently gets voted as one of the places tourists look to visit when they come to the UK. Pubs raise more than £100m for charity (and £42m for grass roots sports!) every single year. KAM Media research has shown 94% of British adults think a visit to the pub with friends is good for your mental health. A total of 800,000 people are employed directly by the pub industry. The fact pubs have been closed for the past 12 weeks has had a catastrophic effect on so many people who rely, in one way or another, on their local. 

With there being a light at the end of the tunnel and a possible reopening date of 4 July, KAM has released the “Return of the Pub” research report. This report aims to help pubs reopen with the insight they need to ensure customer and employee safety – and to give every licensee the best shot at ensuring their business not only survives but thrives in the new normal. In this extraordinary situation we find ourselves in, it’s more important than ever we are basing strategic business decisions on fact, on insight; the pub customer of a few months ago has changed, and we need to understand how – and how that behaviour will evolve as the pub industry comes back to life. We’re proud to have created this report with support from the British Institute of Innkeeping, Toggle and the participating pub companies.

So what kind of hit is the industry likely to take in the short term? We know regular UK pub-goers visited pubs on average 1.6 times per week prior to lock-down. The 1,000 people we spoke to say they will visit pubs on average 1.4 times per week when they reopen. That points to an overall decline in pub visits of 12% – and that’s from regular pub-goers – not-so-regular visitors will be likely to visit far less, bringing that 12% up much higher.

The average household will have 17% less disposable income coming out of this pandemic – almost half of the consumers we spoke to who said they would visit pubs less said they’d do so in order to save money (62% said they were worried for their health). Pubs need to focus on providing fantastic value (not just low prices) to get people coming through the doors. Don't rely on price discounts. It'll always be cheaper to drink at home so it needs to be experience-led. We know more than two-thirds of customers tell us they go to a pub to get an experience that they can’t get at home. Consumers have learned how to enjoy themselves in their houses – we need to show them what we can offer that’s different to what’s in their living room or kitchen.

But we really need to make sure the British pub is still a pub – 32% of those we spoke to said they thought pubs will have fundamentally changed from “before”. We must ensure the things pubs are famous for – hospitality, good service, food, drinks, atmosphere not only remain, but are communicated to our customers.

Our research tells us one in three pub-goers will be cutting the amount of time they spend in the pub when they return. However, one in six claim they will spend more time in pubs, and this is considerably higher within the 18 to 34-year-old bracket – that group who, perhaps, we were struggling to attract prior to lock-down. This is a huge opportunity to expand our customer base with those who are, because of age/less health concerns, happier to get back out into pubs. 

We asked customers: “What will affect where you choose to go when you do go back out to pubs?” A total of 47% told us they’d pick a pub they’ve been to before. Trust and familiarity will be key factors in where pub-goers choose to go when pubs reopen post-lock-down. Our research tells us personal protective equipment doesn’t appear to be as important as “space”. Pub customers want to feel comfortable but without necessarily seeing too many overt signs of “safety measures” that take them out of the moment – they want to ultimately feel like they are back in the pub they know and love. Trialling new places might also be off the agenda for a little while. Marketing should focus on re-engaging with past customers first. Getting their visits back up to normal levels is the primary aim, and secondary is attracting new customers. 

As an avid pub-goer and supporter, I’m confident the industry will weather this storm, just as it has so many others – but we’ve got to get it right first time. There will be no margin for error with this new, cautious customer. It’s about providing a safe, clean environment with the hospitality and atmosphere that make it worth leaving the house for. I, for one, can’t wait for that first drink at a bar in (hopefully) a couple of weeks’ time – see you there?

In the very early days of covid, I had a conversation with Brandon Stephens from Tortilla in which he talked about wanting to gather together a coalition of operators to deliver meals to the teams working in hospitals. He knew these teams were working at full tilt and didn’t have access to fresh food during their shifts – they were literally grabbing hold of any food they could, and it certainly wasn’t fresh or nutritious. He wanted to move really quickly to sort out the situation. He had already set up Feed Our Frontline by the time we had our conversation and had an amazing group of people already working with him.

Eventually Feed Our Frontline became part of a bigger hospitality movement with Feed NHS, Leon, Meal Force and BaxterStorey, which all provided meals for front line workers in the NHS. By the end of the project, Feed Our Frontline had delivered more than 300,000 meals into 30 hospitals.

It was a staggering achievement. It had to work with operators with different product ranges (from fruit bowls to noodle bowls), with hospitals that all had different processes and needs, and with a delivery company (Deliveroo) that could work quickly and flexibly. Just collating the requests and matching them with supply was a mammoth task in itself.

The team had passion, commitment, and a sense of purpose it didn’t want to lose when the need for food deliveries into hospitals lessened a few weeks ago. It wanted to continue to make a difference. It had become clear during the crisis numerous brands were engaged in charitable activities before covid but only a small selection of these received the acknowledgment and credit they deserved. 

The question was how could it expand the experience and learning into a bigger arena that could shine a light on these efforts? The team believed there was a need for an organisation that could highlight and amplify the positive community activities of individual operators as well as the industry as a whole. This felt like the time, more than ever before, hospitality could step up to help its local communities. Showcasing these good deeds was critical both to the re-engaging of customers and the lobbying of government for support. 

So, Hospitality Feeds was launched. This is an initiative for hospitality operators across the sector to provide meals to those in need. It also serves as an industry-wide voice to showcase the good deeds the sector’s broad, and international, workforce does. The programme has four core aspects: 

Meal pledge: Coalition members will pledge to provide a minimum number of meals to one or more charitable causes of their choice, currently proposed to be 100 meals per restaurant venue per year. Brands will choose a cause that suits them based on positioning, history and location. Hospitality Feeds is not intended to be cause-specific. A distributed approach is beneficial in ensuring coverage across causes and regions. Hospitality Feeds will also seek to recognise those making the biggest impact.

Meals-at-cost: Hospitality Feeds will establish relationships with charities to make at-cost meals available should those be requested by the charities.

Crisis assistance: Moving forward, if any major crises occur where prepared meals would be beneficial to those affected, the Hospitality Feeds steering committee will gather to reach out to coalition members to get meals to those who need them.

Awareness: Hospitality Feeds will collate data from all hospitality-led, food-based charitable initiatives and champion this work with key partners such as UKHospitality and Hospitality Action to highlight our businesses and employees as a force for good. 

The target of Hospitality Feeds is to provide three million meals a year, which is equivalent to a meal for every hard-working employee in the hospitality sector. 

In my humble opinion, this is a fantastic initiative that brings together the desire within the sector to help others less fortunate or more in need than themselves. It does not replace what is already happening. Indeed, the umbrella branding will help bring these initiatives more to the fore and give them additional publicity. Importantly though, it will help provide a framework and offer advice to those operators that want to do something but don’t necessarily know how to make it happen.

It’s how Brandon and the team started. They wanted to do something but didn’t know how. Through sheer persistence, determination, dedication and hard work they turned a vision into reality. There is much for us all to learn from their experience. It’s one of the hundreds of reasons why I love this sector. If you want to know more about Hospitality Feeds or have any questions then email Brandon Stephens on Brandon@tortilla.co.uk or Ed Standring on ed@sweetpotato.co.uk

In early March, when the UK was gripped in pre-lockdown panic, social media was awash with images of supermarkets with empty shelves and long queues. And then, as we found ourselves confined to our homes, popping to the supermarket whenever we wanted to was no longer something we could take for granted.

 

Step forward the humble British takeaway. Over the past three months, takeaway owners and their employees have stepped up to the plate (excuse the pun) and done their best to keep the nation fed during this pandemic, as well as supporting thousands of front line workers, often out of their own pocket. However, like so many other businesses within the hospitality sector, many takeaway owners found they had no choice but to close and furlough staff in order to survive. 

 

While restaurants have been shut, loss of revenue has been counterbalanced by the reduction in running costs. With lock-down slowly beginning to ease, takeaways will be looking at how they can fully reopen in the coming months. But they will desperately need capital investment to restart. With reopening comes supplier payments, employee wages, rent bills, and, eventually, tax bills when the business rates holiday ends next year. Taken together, many businesses may see whatever working capital they have run out quickly.

 

And we all know things are not just going to return to the way they were before. The sector will be facing a prolonged period of reduced footfall. Restaurants and other hospitality businesses will be at the mercy of consumer confidence, which could take months or even years to fully return.

 

The government’s support for businesses over the past few months has been critical in saving these restaurants, allowing them to stay afloat without having to lay off employees. However, it will all be for nothing if support measures are withdrawn at pace in the coming months and businesses fall by the wayside.

 

The government has since laid out a timeline to introduce a more flexible Coronavirus Job Retention Scheme (CJRS), which will allow workers to return to work part-time from July without businesses losing out financially. This gradual and cautious approach to withdrawing measures is welcome. However, once the scheme is no longer available, the industry could face a tsunami of job losses without further support.

 

Continued support on commercial rents will also be crucial. Through this crisis, the majority of landlords and their tenants have worked well together to reach agreements on debt obligations, while the government has already stepped in to protect commercial tenants from any aggressive rent collection and closure measures. This co-operative spirit must endure as businesses reopen and the pressure of startup costs begin to take its toll. 

 

The Coronavirus Business Interruption Loan Scheme (CBILS) was launched with the best of intentions. However, it has not been the lifeline for businesses many would have hoped. Small business owners have faced long delays to loan applications from their banks or complete refusals. Banks are continuing to strangle the scheme at birth with red tape, when they should be offering lower interest loans to support viable businesses. The people running these businesses don’t have banker-sized bonuses or second homes to guarantee against these loans. They are ordinary people providing an important service at a reasonable price – up and down the country. In contrast, the Bounce Back micro-loan scheme is comparatively easy to apply for, but does not offer the same scale of financial support as CBILS.

 

Two months ago, the chancellor said he would do whatever it takes to support businesses through this. If he’s going to keep that promise, he must make it easier for small business owners, the backbone of our economy, to access support to boost working capital. He must also recognise this crisis does not end when lock-down lifts. For businesses within the hospitality sector, the impacts will continue to play out for months to come. Support on wages, capital and rent is now more important than ever. If things continue as they are, thousands of small businesses will go under.