Pub and restaurant bosses back Chancellor

Small businesses in the hospitality and leisure sector heaved a collective sigh of relief last week after the Chancellor’s multi-billion pound giveaway in his mini-Budget. But business experts warn that more help is needed to support other sectors hit by the coronavirus downturn that are not specifically included in Rishi Sunak’s £30billion rescue package. 

‘I’ve just finished my second bottle of vodka,’ joked one restaurant boss, minutes after the Chancellor finished speaking on Wednesday. ‘I’ve been celebrating.’ 

Pubs, restaurants, hotels and many other hospitality businesses were able to re-open on July 4, but months of lockdown as well as reduced trading capacity mean many are still perilously close to the edge. 

Sunak’s move to cut VAT from 20 per cent to 5 per cent for food, non-alcoholic drinks, accommodation and certain attractions from Wednesday until mid-January was hailed as a lifesaver for one of the sectors hardest hit by lockdown. 

Other measures to help all sectors include a £1,000 bonus for keeping furloughed staff on until mid-January, a £2billion Kickstart scheme to pay the wages of new workers aged from 16 to 24 years old for six months – a key demographic for the hospitality industry – and financial incentives to hire trainees and apprentices. 

Sunak even made the unprecedented decision to boost the dining sector by offering everyone in Britain half-price eating out from Mondays to Wednesdays in August. 

James Breslaw, the founder of Asian restaurant chain Neds Noodle Bar, was jubilant on hearing the Chancellor’s speech last week. 

‘This is what the hospitality industry needed – a dramatic intervention to help struggling businesses get back to normal,’ he told The Mail on Sunday. ‘The VAT cut is amazing for businesses, which will have bills and debts from the last three or more months to pay. So yes, it’s incredible. We couldn’t have hoped for anything better.’ 

James kept all five of his restaurants open throughout lockdown by switching them to takeaway and deliveries only. 

‘During lockdown, only we and Sainsbury’s were open out of 102 shops in Westgate Oxford,’ he says. He is now delighted to be serving customers inside the restaurants. 

‘London is still pretty dead as there are no tourists, no students, no office workers and nothing to do in the evenings, so we’ve gone from taking £1,000 an hour to £1,000 a day,’ he says. Cashflow was helped by the business grants, but James managed to avoid taking out a Coronavirus Business Interruption Loan (CBIL) and is trading profitably. ‘We’re taking less money, but our overheads are a lot less as we’ve renegotiated our rents and trained staff to do many roles,’ he says. 

‘I love the idea of getting families out to restaurants by giving 50 per cent off – that’s such great news, especially for the independents. 

‘If we have the most fantastic August then I think things will be great. If it’s wet and we have another coronavirus spike then it will be tough. But we’re keeping our fingers crossed.’ 

When The Mail on Sunday spoke to Tim Foster, co-founder of The Yummy Pub Company, back in April, he had converted his 15th Century lakeside pub The Wiremill in Lingfield, Surrey, into a clickand-collect grocery store and was busy delivering to the local community and NHS workers. 

Now three of his pubs, including The Wiremill, have re-opened – doing 650 covers on the opening weekend and turning away hundreds more – business is getting back to as normal as it can be. 

Having initially decided against applying for a CBIL, Tim eventually got one worth £350,000 and is investing a sizeable chunk of it in a huge pagoda that will seat 160 people well into the winter months. 

‘It’s potentially going to transform the business,’ he says, ‘although it did mean we were pouring 26 tons of concrete into the ground just before re-opening.’ 

While turnover for the group is half what it would usually be, an upside of the new working style is that weekday brunch in his venues has never been more popular. 

While there are fewer people in the pubs due to social distancing, they are treating themselves to more expensive dishes. 

‘The VAT cut is great as we can pass the savings straight on to the customer,’ he says. ‘We’re going to make the most of this opportunity by making our ‘treat’ dishes, such as beef wellington and lamb shank, more affordable. Pretty much everything the supermarket sells is zero VAT, so if you’re trying to compete by adding 20 per cent to everything, you’re not on a level playing field. Now we’re got a fighting chance.’ 

He adds: ‘The Eat Out to Help Out scheme is great as it will encourage people to come between Mondays and Wednesdays. We can’t ram the pubs on Fridays and Saturdays, so this initiative will spread the week out.’ 

Tim also welcomes the bonus for bringing people back from furlough, as well as the Kickstart plan for recruiting staff, and incentive to employ trainees and apprentices, especially those aged under 25. 

‘That’s exactly the age group who work in this industry and we will 100 per cent be taking advantage of that,’ he says. 

‘It will really help with a project that we are involved in called Only a Pavement Away, where we work with homeless and ex-military people to try to get them into full-time positions in the industry.’ 

Gary Turner, managing director of small business accounting platform Xero, says he was ‘encouraged to see such a broad package of support for hospitality – by far the most impacted sector’. 

But Turner adds: ‘I’m surprised there wasn’t more support for the UK high street, which is a huge employer and huge contributor to the economy. There will be lots of retailers right now feeling rather desperate, especially when they see the support for the pub next door. 

‘Hotels, pubs and restaurants have been hugely impacted by social distancing and it shows how grave it’s been for that sector. I for one will be eating out to help out. However, there must be more support coming for other sectors that weren’t as hard hit, but still were impacted significantly.’ 

Andrew Goodacre, chief executive of the British Independent Retailers Association, agrees, saying: ‘It is disappointing that there is no VAT cut for retailers in general, and no changes to National Insurance contributions. There needs to be thought given to how consumer demand is stimulated on the high street – or many businesses will close and jobs lost.’ 

With the furlough scheme paying the wages of millions, there is the fear that job losses could simply be being deferred. Turner says: ‘The furlough scheme has certainly helped small businesses across every sector. We’ve seen a 28 per cent reduction in sales year-on-year across the board, but employment has fallen by only 6 per cent, so clearly the scheme has done its job by halting job losses. 

‘But unless the economy recovers, there could be a wave of redundancies waiting in the wings.’ 

Shiv Lewis, general manager of the 150-year-old Garibaldi Pub in Redhill, Surrey, is definitely going to be using the Kickstart scheme, and will be looking to take on a new apprentice. She is also delighted at the prospect of getting a bonus for bringing staff out of furlough. 

‘The money will really help,’ she says. ‘Our staffing bill has trebled since re-opening due to social distancing – we have one staff member on the door, one pouring drinks and one doing the table service. 

‘We’re also keeping the takeaway service going that we started in lockdown. We’re so conscious about keeping staff and customers safe and avoiding a second lockdown.’ 

‘It’s all about people rather than profits at the moment,’ she adds, ‘but it has been wonderful to be able to welcome people back into our beer garden again. Even ordering supplies such as crisps and pork scratchings was exciting.’