As restaurants, pubs and bars get ready to reopen their doors from Saturday (4 July), CGA’s ‘Pre-Opening Nerves’ webinar delivered vital insights from both the people running them and those using them. Here are ten of the major dynamics and changes to watch as the sector gets back to business.

1. Phased openings

The new Business Confidence Survey from CGA and Fourth provides the clearest evidence yet that the sector’s reopening will be gradual, not sudden. Nearly three quarters (71%) of leaders plan a phased rather than mass relaunch, and only one in eight (12%) will reboot their full estate. CGA’s best estimate is that around a third of managed sites will be open on the first day back—though harder data will be available after the weekend.

This staggered return mirrors the cautious approach of consumers. CGA’s latest BrandTrack survey suggests a fifth (19%) of consumers—nearly ten million people—are likely to visit venues as soon as they reopen, with those in the younger, highly-engaged and freer-spending MATCH segments, like Trending Tastemakers (37%) and Business Class Seekers (33%), leading the charge back. But a quarter (25%) of consumers say they don’t yet feel comfortable to return, and a third (33%) will only do so if they are sure that the proper precautions are in place.

2. Very cautious optimism

The Business Confidence Survey hit a record low in the immediate aftermath of the lockdown in April, when just 15% of leaders felt optimistic about the next 12 months for their business. Three months on, that figure has doubled to 32%, while those feeling optimistic about the market in general has trebled, from 5% to 16%. Food-led businesses tend to be more optimistic than drink-led ones, where solutions to safety challenges can be harder to roll out.

These figures are a fraction of levels before the pandemic hit. In February, 83% and 60% of leaders were optimistic about the next year for their business and the market respectively. But they do indicate guarded confidence about recovery in the second half of 2020 and beyond. As CGA’s research and insight director Charlie Mitchell put it at the webinar: “Optimism has bounced—though there was really no other way for it to go.”

3. Some permanent closures

As new trading patterns emerge, operators will have to decide which—if any—venues they keep closed. On average, leaders currently predict that closures will be 8% of managed estates, and while that figure may well eventually prove to be higher—with the independent sector adding substantially to the tally—the number of leaders who don’t plan to permanently close any sites has nudged upwards, from 37% in April to 43% now.

One reason for this uptick in confidence is the government’s move to halve distancing requirements from two metres to one. This has raised the capacity of outlets from 30% to 70%, and CGA estimates that 145 million more pints of beer could be sold as a result. “A lot of sites will still struggle to cover costs, but we’re definitely moving in the right direction,” said Charlie Mitchell.

4. Rent battles

The Business Confidence Survey singles out rent negotiations and settlements as the biggest challenge for operators at the moment. Two thirds (66%) of leaders say they’ve reached agreement about rents with fewer than half of their landlords. And there isn’t much confidence that the government’s code of practice for tenant negotiations will make life any easier, with half (49%) considering it a bad solution. As in most retail sectors, rents are set to be a major flashpoint in the months ahead.

5. Motivated but anxious staff

As many staff return to work, a CGA survey of hospitality professionals with CPL Learning indicates that two thirds (69%) are satisfied with the level of support they received during lockdown. Many are now looking forward to returning to the frontline—but the majority (65%) remain concerned about their short-term job security. And the Business Confidence Survey flags substantial job losses ahead: two thirds (67%) of leaders anticipate laying off staff rather than bringing them back from furlough, with average losses amounting to around a fifth (21%) of all staff.

6. A watch-and-learn approach

Loungers CEO Nick Collins joined the webinar to explain how he had been preparing the business to relaunch, and admitted: “Reopening the estate has been a lot more work than closing it down.” Loungers will open nearly 30 sites on Saturday and another 30 on Wednesday, with the rest following in weekly batches into August. “It will allow us the opportunity to learn from mistakes, train our teams well and make sure they’re prepared,” he said. All sites will retain their usual opening hours for now. Thorough communication with staff has been crucial throughout the pandemic, Collins added. “We took the approach from day one to be really honest with them… it’s our responsibility now to explain how we’re going to keep them safe—that’s really important.”

7. Support from technology

Back of house systems, apps and other technology will have an important role to play in operators’ return to work. Fourth’s senior vice president of strategic partnership James England told the webinar there had been a flurry of interest in booking, ordering and payment solutions, and Fourth has been helping some employers to trial health screening apps. Nick Collins said Loungers was preparing to roll out an order-at-table app for the first time, having been sceptical until now about putting technology between staff and customers. “Coronavirus has forced our hand… It’s a bit of a leap into the unknown for us, and it’ll be fascinating to see how our customers respond to it.”

8. Pressure on the supply chain

The Business Confidence Survey shows that businesses have been very quick to mobilise for reopenings. That is partly because of the support they have received from their supply chains, and more than four in five leaders say they have confidence in all (21%) or some (62%) of their suppliers. But with the sector in uncharted waters, we may see these suppliers come under pressure, James England suggested. A very proactive approach will be needed to ensure that access to ingredients, products and equipment isn’t compromised in the weeks ahead.

9. Squeaky clean sites

Before the lockdown, BrandTrack research showed that hygiene and cleanliness ranked fifth on the list of considerations for people going out to eat or drink—but now it has jumped to top of the list. “Consumers really want to trust that venues are looking after them and staff… there’s a huge bulk of consumers who need reassurance,” said CGA’s director of food and retail Karl Chessell. For now, their non-negotiable demands are around spacing and sanitizing, while desirables include table service, tech-enabled ordering and payment and PPE. Some precautions though, like disposable cutlery, temperature checks and perspex partition screens, are considered off-putting.

Nick Collins said it was vital to communicate hygiene protocols as well as implement them. “So much of this about perception. It’s so important to be seen to be taking all the precautions that people will expect.”

10. Flexibility

Amid so much uncertainty around consumers’ post-lockdown attitudes to out-of-home eating and drinking, the Business Confidence Survey shows widespread concerns about frequency and spending levels, and a hit on profits. “It’s going to be a long, hard road back for the sector,” said Karl Chessell.

As we adjust to the new normal, flexibility will be a key watchword. Increasing revenue from deliveries, meal kits and retail products, and responding to dynamics like shifting dayparts and the increased demand for local businesses, could help businesses to sustain themselves through the rest of 2020. “This is a great time to be agile and launch new revenue streams… to leverage the value of a brand in other channels.”

Even better news is that the BrandTrack indicates a huge consumer appetite for operators that can deliver the right balance of safety, experience, quality and value. As one respondent put it: “Get ready for us and we’ll be back soon—it’s been far too long.”

The CGA Fourth Business Confidence Survey is based on responses from nearly 100 leaders working at CEO, MD, Chairman, Director or other senior management level. The survey was carried out in late June 2020.

     

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