Specialist
Former Senior Executive at Punch Taverns Ltd
Agenda
- Financial implications resulting from the latest lockdown for the UK pub industry
- Seasonality impact on full-year 2020 profits
- Demand planning and supply chain implications
Questions
1.
What have been the key trends in the UK pub industry since reopening in early July 2020? How were things developing before going back into second lockdown?
2.
Did 100% of the pubs that closed in the first lockdown reopen prior to October, feeding off the positivity of August?
3.
Can you expand on the tier system given how it’s likely to continue after lockdown, presumably until the furlough scheme ends in March 2021 at least? How does each tier affect a wet-led vs dry-led pub?
4.
Is there any data for the months when the tier system was implemented to show pub sales volumes and how sales were affected in the various tiers?
5.
If the pubs have to operate under tier 2 or tier 3 after the lockdown, do you think most will decide it’s not worth reopening even though it’s December, which is typically a peak month for pubs?
6.
Can you give some context on the percentage of revenues pubs made in November and December in pre coronavirus years, to demonstrate how drastic this November 2020 lockdown is? What might be the consequences if pubs are forced to close in December as well?
7.
You highlighted the importance of consumer confidence going back into the pubs. Do you think the release of the NHS [National Health Service] app as well as other track-and-trace procedures have been a net benefit or net negative for the industry? Do you think consumers are being turned away if they don’t have the app or refuse to download it, or do you think it inspires confidence?
8.
You said track-and-trace showed that only 2% of coronavirus infections were via hospitality businesses. Given this data, has there been any industry pushback or conversations about government support to try to get pubs reopened, or has that dialogue not really been happening?
9.
Are any further government relief support programmes being extended throughout December and into 2021 – is there anything significant for the industry?
10.
How significant is the business rates saving for the pubs?
11.
How big an expense item is rent out, if reviewing the total costs for a managed business? How should we assess fixed vs variable costs in managed and L&T [leased and tenanted]?
12.
Do you expect landlords to be as forgiving with rent holidays in the second lockdown as they were in the first lockdown?
13.
Could you outline some of the costs incurred entering the second lockdown and for temporary closures?
14.
Other industries have struggled around demand planning when reopening. How big of a challenge do you think this will be for the pub industries, knowing what tier they will be in and preparing for a hopefully busy December? Are there any potential supply issues?
15.
Would more wet-led more pubs start focusing on the dry and the food aspect, given that it allows more flexibility in the tiers? Do you expect a general industry shift towards dry-led?
16.
In our previous Interview [see UK Pubs – H2 2020 Trading Update & Outlook – 8 September 2020] – before the tier system was introduced as well as the second lockdown announcement – you expected the industry to achieve around 90% of FY19 revenues in FY21. How has your projection changed? I appreciate that it’s tough to estimate but how should we approach the methodology here?
17.
How many pubs to date have exited the industry and what is your expectation for permanent pub closures over the next 12 months?
18.
Are there any industry movements or sales of pubs that aren’t actually in loss to the industry, but are under distress, being bought by any of the other bigger publicans?
19.
Have a lot of CAPEX projects been put on hold during the pandemic? I guess it’s quite likely but has it been the case?
20.
If we take a best-case scenario where tier 1 is applied across the UK, sales might be down 20-30% but pubs need to be operating above 80% to really drive profit, as you say, so it will still be a rocky road. Which pubs might perform better and which have the best chance of making a profit over the next three months – are there some pockets of positivity? Presumably it might be local and rural, suburban pubs, given the upcoming festive period.
21.
How do you think capacity in the pubs will be affected now that outside areas are quite minimal? During the summer, you said the industry’s rough capacity was around 60-70% under the trading conditions. How do you think that’s changed now, and do you think there’s pent-up demand to fill capacity and get maximum footfall that pubs are allowed in December?
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