CoronavirusNews

Independent businesses set to decline ‘rapidly’, warns CGA

The independent sector remained the largest in the hospitality market in March, though their future is “now under threat”, according to CGA.   

The group warned that their rate of decline would “accelerate rapidly” once the hospitality sector begins to reopen from 4 July. 

According to the latest figures from the CGA AlixPartners Market Recovery Monitor, 96% of business owners in the pub, bar and restaurant industry are expecting a phased reopening, but only 36% believe they will eventually re-open all their sites for trading.

A further 32% anticipate the need to permanently close their sites, with the remaining third “yet to decide”.

It comes as CGA said that independently-owned operations have “borne the brunt of closures” in the last year, while group-owned and operated pubs, bars, restaurants and hotels have grown in numbers, backed by corporate investment.

The numbers of independent food-led businesses fell 2.6% in the last year, while drink-led sites, including pubs and bars, were down 1.5%. The leased pub segment also declined 5.5% over 12 months to 19,376.

In contrast, group-owned and managed sites saw a 1.6% uplift in numbers to 21,461, while managed food pubs grew 2.2% and group-owned full-service restaurants grew 7.6%.

CGA’s latest Business Confidence poll also revealed that 81% of operators are already recovery planning, though almost all expect to see a “much-reduced” market in the future. 

CGA group CEO Phil Tate said: “The challenge for business owners, directors and planners – as well as industry investors and suppliers – will be to understand not just how long the casualty list will be, but which will be the worst hit areas, what type of businesses are most under pressure and how individual sites will pivot to new styles of operation.”

“While corporate-investment has sustained growth programmes to date, the Covid crisis has thrown everything in the air. The question is whether the bigger corporate players will be best placed to emerge post-lockdown still in a relatively strong position.”

Graeme Smith, managing director at AlixPartners, said: “Many operators have got their tape measures out to assess the impact of social distancing restrictions on operations and capacity. 

“Even with well-configured space, cover counts will be meaningfully reduced and may prompt further questions on whether it is sensible to reopen, or not, from a profit perspective.”

He added: “Location considerations will be another factor – it’s easier to foresee rural and suburban venues opening faster than those located in large city centres given there will be a significant period before offices reopen and footfall numbers return to prior levels, particularly where mass-transit is key for commuters.”

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