Over 350 business owners in the hospitality sector participated in the survey released by Armstrong Watson LLP, Accountants, Business and Financial Advisers, which shows that over 37% are considering closure or other exit from business.
The bar, restaurant, café, hotel and accommodation owners and providers shared their views on the current issues facing the sector and the impact of government support.
Results suggest operators are concerned over the future of their businesses, with 70% indicating that their ‘exit plans have significantly changed,’ and whilst 80% of those questioned had taken advantage of the JRS scheme, over half stated that ‘the phasing out of the scheme will put their business under significant financial threat’ and 35% are expecting to make redundancies before the end of October.
Other findings showed support for the recent Eat Out to Help Out scheme with 74% of eligible businesses having registered and 85% agreeing that it improved trade. However, cash flow is still likely to be a very major issue, with 80% agreeing with the statement “cash flow will be a major issue for my business over the coming winter months.”
A significant investment has been made by all businesses to make their premises and working environments safe, with the average amount spent on COVID measures ranging from £1,000 to £5,000.
- 35% of businesses expect to make redundancies before the end of October and 32% are still deciding.
- Most hospitality businesses have spent between £1,000 to £5,000 making their premises COVID safe
- 80% used JRS scheme and 56% think the phasing out will ‘put their business under significant financial threat’
- Nearly half (46%) of participants are ‘undecided’ as to the success and job safe guarding of the CBILS/Bounce Back Loan Schemes
- 70% believe their exit plans have ‘significantly changed’
- 37% are ‘undecided’ about whether to exit or close down their businesses due to COVID
- Most businesses (68%) have not passed on VAT cuts to customers
- 74% of eligible businesses registered for Eat Out to Help Out, with 44% having to change their opening hours to do so
- For those that didn’t participate they stated staffing issues, worry of impact on other days and/or were not convinced it would bring extra business as their reasons
- 85% of those that did participate said it improved their trade
- 80% believe that “Cash flow will be a major issue for my business over the coming winter months.”
Commenting on the survey findings, Richard Andrew, Partner and Armstrong Watson’s Head of Hospitality said,
“It is incredibly worrying that the results suggest many business owners are reconsidering their exit plans and the future of their businesses. Whilst government initiatives such as Eat Out to Help Out, loan schemes and JRS have helped sustain businesses during the past few months, with further restrictions soon to come into force and Government schemes ending, unfortunately pressure upon these businesses is likely to increase.
“Whether the Government will look to introduce new support measures for the sector remains to be seen, however, our advice at this stage would be to carefully map out cash flow, understand your business position and liaise very closely with your advisers.”