The day many of us have been counting down to has finally
arrived. April 12 marks the next phase of lockdown easing,
meaning that after more than three months of closed doors
England’s pubs, restaurants, bars and cafes will be allowed to
re-open, albeit only for outdoor service.
There is a palpable sense of
excitement surrounding hospitality reopening, seemingly even
more so than was the case after the previous two national
lockdowns. One possible reason for the added enthusiasm is very
likely the belief held by many that thanks to the strong
vaccine rollout there won’t be another lockdown. All these
factors currently work together to lift consumer sentiment to
levels well beyond those seen over much of 2020, as reflected
in the YouGov/Cebr Consumer Confidence Index.
Apart from the boost to the national
mood, reopening of hospitality also stands to bolster the
economy. In pre-pandemic times, households across
England spent a cumulative £663 million per week on dining and
drinking out. In recent months, this has gone down to
zero, apart for takeaways which are excluded from this analysis
as they could continue even during lockdown.[1] The big question is,
what will this figure rise to, now that venues are
reopening?
One piece of data we can turn to in
order to begin to answer this question is hospitality occupancy
rates immediately after the first and second national
lockdowns, which ended on 4 July and 2 December, respectively.
According to OpenTable figures, which track seated diners from
online, phone, and walk-in bookings, in the first week
post lockdown one diner numbers rebounded to 33% of
pre-pandemic levels. In the first week after lockdown two, the
rebound was stronger with levels at 56% of the pre-pandemic
norm. The most likely explanation behind the faster
rebound after the second lockdown is increased comfort with
socialising and being in busy surroundings, as people became
more accustomed to living with the pandemic, despite the
epidemiological indicators at the time not necessarily
justifying this increased comfort.
With more than half of the
population at least partially vaccinated, optimism at record
highs and a good amount of cash savings and pent-up demand,
there are many reasons to believe that demand for restaurants
and pubs will rebound even stronger than after the previous two
reopenings. Anyone who like me has been trying to get
a dinner reservation for this week and found it impossible
would surely tend to agree. Longer opening hours and expected
price rises will also provide a revenue boost.
One factor which will be limiting
hospitality revenues is that only outdoor service will be
allowed until at least May 17. Research from CGA and Alix
Partners puts the share of venues with outdoor space
(including gardens and terraces, but also more innovative
solutions like car parking) at just under 40%.[2]
The shares vary widely between urban and rural settings, but
with the relaxation of planning rules even city-based venues
can make the most of whatever outdoor space they have and the
share of venues opening is set to be somewhat higher than
indicated as some busy parts of larger cities convert street
space into temporary pedestrianised seating areas.[3]
Taking into account all of these
factors we expect restaurants and other dining and
drinking venues across England to take in £314 million from
outdoor customers in the first week post lockdown.
This will be on top of any revenue streams from takeaway
orders. While this is only a fraction of the normal
pre-pandemic levels, it will still provide a welcome boost to
one of the country’s most impacted sectors. There is no
question however that everyone will be keenly awaiting the
confirmation that indoor hospitality will be allowed to resume
from May 17, enabling many more venues to reopen and increase
capacity.
[1]
The figures refer to expenditure in restaurants and cafes and
alcoholic drink away from home. Takeaways are excluded as they
were able to continue even during lockdown.
[2] https://www.alixpartners.com/media/17471/alixpartners-cga-market-recovery-monitor-march21.pdf
[3] It is difficult to
find data on the share of venues with no reported outdoor space
that will still be able to open or the extent to which those
with reported outdoor space will expand the space. Hence, based
on anecdotal evidence, we have assumed a 25% bump.
