With the government confirming today that pubs and restaurants across England face further restrictions to help tackle the jump in COVID-19 cases, two key players in the hospitality sector have announced major job cuts.
Whitbread, the owner of the Premier Inn chain of hotels and Brewers Fayre restaurants, said it planned to shed up to 6,000 staff after its sales plummeted 76.8% in the six months to 27 August due to the closure of most of its sites during lockdown.
Since reopening, the company said that accommodation sales had been ahead of the market and it had seen strong demand in tourist spots, although demand had remained subdued in metropolitan areas and London. Its restaurants, which also include Beefeater and Bar + Block, were also boosted by the government’s Eat Out To Help Out.
However, Whitbread stated that it expected demand to remain subdued in the short to medium-term, whilst highlighting that the government’s furlough scheme was coming to an end in October.
The company has begun formal consultations on the job cuts, which equate to 18% of its workforce. It expects a large proportion of them to be voluntary. Whitbread has already outlined plans to reduce head office roles by 15%-20%.
Whitbread said: “These changes create a more flexible labour model that can adapt with changes in the demand environment going forward. Our priority is to ensure that the process is fair and that impacted colleagues are supported throughout.”
Meanwhile, JD Wetherspoon announced today that up to 450 jobs were at risk at its pubs in six airports – Gatwick, Heathrow, Stansted, Birmingham, Edinburgh and Glasgow. This is on top of up to 130 head office cuts previously disclosed in August.
“The decision is mainly a result of a downturn in trade in these pubs, linked with the large reduction in passenger numbers using the airports,” said the company’s Chief Executive, John Hutson.
“We should emphasise that no firm decisions have been made at this stage,” he added, saying that JD Wetherspoon will listen to its staff to try and reduce the number of compulsory redundancies.
Prime Minister Boris Johnson today outlined plans to impose a 10pm curfew on pubs and restaurants from Thursday amid concerns that social distancing rules aren’t respected late at night. The sector will also be restricted by law to table service only.
The move has been met with widespread dismay from a sector still struggling to get back on its feet after months of forced closures.
Kate Nicholls, the Chief Executive of UKHospitality argued that the approach will make it harder to control the spread of coronavirus – and pointed to government data that suggests just 5% of infections are linked to hospitality venues.
She said: “These restrictions will come as another crushing blow for many hospitality businesses struggling to recover so it’s crucial these new rules are applied with flexibility.
“A hard close time is bad for business and bad for controlling the virus – we need to allow time for people to disperse over a longer period.”
Nicholls is calling for a support package to be targeted towards the hospitality sector, and said the government must “recognise this will damage confidence even further” and cause the sector to struggle long into next year.
NAM Implications:
- How many businesses could survive a 78% fall in sales over 6 months…
- …yet alone retain 82% of its workforce.
- Watch this space re further cuts.
- Meanwhile, any (i.e. 10pm curfew) further social distancing disincentives…
- …have to add to the lockdown problems for hospitality businesses and the tax payer.
- Time to cut-to-fit and revert to the basics of demand and supply…
- ..with fingers crossed…
