With cashflow concerns topping their agendas, rent has become the number one specific issue, the latest CGA Business Confidence Survey confirms.
Although immediate survival is the top priority, many operators are tentatively developing recovery plans, but with predictions of a return to vastly different and contracted market to pre-COVID times.
The poll of over 120 senior executives and entrepreneurs from across the eating and drinking-out market was conducted by CGA, in association with hospitality technology specialist Fourth, during the week beginning April 20.
It found that market optimism had plummeted from a four-year high in February, when 60% of bosses were positive about future prospects to just 5% now, with 89% pessimistic. While, confidence in their own business was slightly higher, with 15% being optimistic that marked a fall from 83% in February and 31% in March. Now 69% are pessimistic about their own company’s future.
Rent payments and landlord agreements were picked out by 40% of business leaders as the greatest challenge faced currently, with a further 27% seeing them as a ‘major challenge’. Together they topped the list of business challenges, with access to loans the next big worry - with 17% seeing that as the biggest challenge and 37% a major issue. Banking relations, investor support and payments to furloughed staff were down the list.
Overall, 89% of operators now support some form of debt moratorium, with an initial nine-month period the most popular option, backed by 39%, with another 23% preferring a year-long option.
However, there were differences in the rent outcomes bosses were preparing for. While 28% were looking for a rent-free period and extended lease, 26% were looking to a deferral, with another 20% expecting part payment in negotiation with landlords.
But when asked the question of what would be the best next measure the Government could introduce to support their business, 70% went for a nine-month rent-free period to December, ahead of universal business interruption insurance (favoured by 17%) or removal of the £51,000 rateable value threshold for grants (13%).
Other key findings from the survey were:
- Just 27% of businesses surveyed had any sites open, either for delivery (8%), grocery and food supply to the public (4%) or for NHS or community support (14%);
- Almost all businesses have furloughed nearly all staff; 83% of have furloughed over 90% and 96% over 70%;
- Three quarters (76%) with furloughed staff are not topping up wages, with 18% doing so excluding tronc;
- There is wide support for extending the furloughing, with a three-month extension after sectors reopen (backed by 36%) and a sector-by-sector extension dependent on opening (backed by 33%) the two most favoured options;
- Exactly half (50%) of businesses back extending furloughing in three-month blocs, with 40% favouring a month-by-month approach;
- The majority (81%) of operators have already started recovery planning, with 72% having done so based on various different scenarios.
Other areas researched included:
- How companies are engaging with staff on furlough;
- Concerns about the loss of quality workers during the crisis;
- Senior team salary reductions;
- Lockdown lifting and reopening scenarios;
- Permanent site closures;
- Consumer expectations.
More details from the survey will be released next week, when CGA will host a special webinar presentation at 2pm on Wednesday, May 6, click here to register