For nearly 18 months now, the London restaurant sector has faced an extremely challenging time. As well as contending with lockdowns, restrictions on trading hours and limitations on the number of customers they can safely manage, there have also been concerns about staff wellbeing, staff shortages and, most recently, staff self-isolation to contend with.
And the impact of the pandemic is still being felt. It’s estimated there are now almost 10% fewer restaurants across the UK compared to the beginning of last year, according to CGA Alix Partners – and while spectacles like Euro 2020 and the Olympics will have given some a boost, it’s clear the sector needs a helping hand in bouncing back to pre-pandemic levels.
Whilst the furlough scheme, temporary VAT reduction and business rates holidays have helped the hospitality industry, many London restaurants have needed to work with their banking partners for further assistance. At Lloyds Bank, our SME hospitality and leisure team in London alone has provided more than 1,000 Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) loans combined, amounting to approximately £100 million of support.
This support has helped many businesses within the sector to not only navigate the difficulties they have faced, but to innovate and, ultimately, to bounce back. They say that necessity is the mother of invention, and our recent survey found that almost two-thirds (63%) of London firms said the pandemic forced them to be more creative and innovative in finding new areas of growth.
Many London restaurants have taken major steps in reinventing themselves during these difficult times. One of the ways some have done this is by investing in technology, enabling their customers to order online or through an app. This increase in online orders has also led some to change their operating models by switching to dark kitchens – takeaway premises where food is prepared separate to a restaurant. This is a trend we expect to continue, as many restauranteurs will need to continue to provide both a full restaurant experience and a quick, reliable takeaway and delivery option to maximise cash flow in at least the short term.
This need to be versatile and to chop and change between operating models can put incredible pressure on cash flow at an already-difficult time, but specialist financial tools are available to help. For example, invoice finance allows businesses to access up to 90 per cent of the value of an invoice within 24 hours of it being issued, and can provide a useful boost to cash flow during periods of uncertainty.
The long-awaited ending of lockdown restrictions in July brought with it reasons for optimism, and our latest Business Barometer data revealed that two-thirds (66%) of the UK hospitality sector expects business activity to increase over the next year.
And there are other reasons to be optimistic. As more and more adults become fully vaccinated, public confidence in the sector will return, and as restrictions on foreign travel remain in place, we expect people will continue to make use of the hospitality and leisure offerings here in the UK. The gradual return of office workers to the City and other reliant areas of the capital will also increase footfall and hopefully bookings in the longer term.
Considerable challenges undoubtedly remain. Restaurant booking numbers since the sector reopened back in April do reflect a strong pent-up demand, with people looking to reconnect after so long apart. However, they are still down on previous years.
By taking the time to plan ahead and exploring the different financial tools available to them, London restaurants can ensure they are as prepared as possible for the latter months of 2021.