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The True Cost of Furlough

by | Feb 3, 2021 | Blogs, Hospitality

Furlough costs the UK Hospitality industry in excess of £542 million a month during lockdown – The True Cost of Furlough

Furlough has been a lifeline for so many businesses in the hospitality sector and beyond, however despite all that the scheme has done to ease the mass redundancies and retain jobs in the sector, it is clear that Furlough is not the free lunch it is sometimes portrayed as. Operators using the scheme benefit from a grant that covers up to 80% of their employee’s average earnings (probably the most simplistic way of describing the behemoth of complex exceptions, limits and grey areas associated with the CJRS). For many employees, this money will see them scrape through the crisis, albeit uneasily. However, for the employer, the ability to be able to keep teams employed comes with a cost and it is no insignificant amount.

For a start, the employer continues to pay National Insurance contributions, holiday is still accrued, and pension costs are not included in the grant. The total figure for average extra employment costs per month per site, over and above government furlough support, comes to: £3,738 which means the monthly furlough bill for hospitality comes to £542 million.

On top of employment costs, operators have rent to pay, utilities and insurance payments; government grants based on rateable value are available and are aimed at offsetting a large sum of bills, yet leave operators constantly out of pocket. There are also variable costs to using the Furlough scheme, such as cash flow costs owning to the fact that the scheme pays in arrears: operators are seeing the money leave their businesses, before being able to claim it back. For most businesses who have little or no expectations of trading profitably for the first 4-6 months of 2021, funding is becoming more and more critical.

Rob Pitcher, Chief Executive of Revolution Bars and user of S4labour said that the scheme, while welcome, has cost the business £1million at a time it has seen revenue vanish.

Sam Wignell Chief Customer Officer at S4labour added: “With the current levels of government support, businesses are going to run out of cash before they get the opportunity to reopen. The true cost of furlough is much higher than one might imagine.”

As featured in:

2020 Full Hospitality Sales Report

by | Jan 11, 2021 | Blogs, Sales Figures

2020 saw revenue decline of 51.38% overall, characterised mainly by a 98.3% decline in Q2 driven by lockdown 1. In the first two months of the year, prior to the effects of the pandemic, revenue growth was 6.6%. As pubs and restaurants opened up on the 4th July, consumers were hesitant leading to low demand levels and revenue was down 50.9%. Overall London was more affected, at a revenue decline of 56.0%, whilst Non-London performed better, at a decline of 50.2%.

The past year has been a tough one for everyone, and we just want to say thank you to you all.

S4labour has supported it’s customers with repeated 50% discounts throughout the pandemic.

Please follow the link below to download the full report.

 

 

Download the full 2020 Hospitality Sales Report

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A heavy decline in sales, and a 50% discount for S4labour customers for January.

by | Jan 1, 2021 | Blogs, Sales Figures

Following a heavy decline in sales, S4labour writes to all customers promising 50% discount in wake of new low point for the industry. 

Analysis from S4labour shows that total hospitality industry sales were down 73.7% on last year for December. Food was down 63.7%, Drink was down 81.7% and Accommodation was down 71.4%. Given that December is usually hospitality’s busiest month, this is a hard blow for the industry.

To exacerbate the problem, New Year’s Eve sales were down by 97.8%, as all pubs and restaurants moved into Tier 3 or above prior to the 31st. The few takeaway sales that were left do not compensate for eating in sales.

In a communication issued today, S4labour has reassured all customers that they are “prepared to stand with them” shouldering some of the financial burden as new restrictions hit. All customers have been given a 50% discount on January’s invoices.

S4labour has offered the same discount to all customers during previous lockdowns and has always made available to those whose tiers had made it impossible to trade. However, as the vast majority of operators will have moved into tier 4, very few will be trading and almost none profitably.    

Sam Wignell, S4labour’s Chief Customer Officer commented: “As we enter the New Year, this is a dire time for our industry and it is the responsible thing to share some of the pain and to help our customers get to the other side of this crisis.”

Christmas takings in pubs, bars and restaurants fall almost 80%

by | Dec 29, 2020 | Blogs, Sales Figures

https://www.theguardian.com/business/2020/dec/28/christmas-takings-in-pubs-bars-and-restaurants-fall-almost-80

Analysis from S4labour shows that total hospitality industry sales were 79.4% down on last year from Christmas Eve to Boxing Day. Drink was down 84.2% and food was down 64%. Given that households were prevented from mixing in hospitality venues, it is no surprise that bookings were cancelled and sales plummeted.
 
Individually, total figures for the individual days were as follows: Christmas Eve was down by 71.5%, Christmas Day was down by 78.5% and boxing day was down by 88.1%.
 
During the festive period, sites often close for at least one of the days, however this year with the recent Tier 4 introduction, most sites have been unable to open this year the majority of sites were closed; 53.3% of sites were closed on Christmas Eve, 33.6% of sites were closed on Christmas day and 65.2% on boxing day.
 
Richard Hartley, Chief Product Officer commented: “this unpredictable year has ended in very suppressed Christmas sales due to ever increasing COVID restrictions, and it’s not looking likely to change for a while yet.”

Dec 2020 sales to date

by | Dec 21, 2020 | Blogs, Sales Figures

 Analysis from S4labour shows that sales are down 64.3% year on year for Tier 2 venues, for December to date. As a result of the restrictions places on hospitality, food is down 55.3% and drink is down a significant 72.5%. Given that Tier 1 is a tiny percentage of the country, these Tier 2 figures are the best case scenario for the majority of the hospitality industry, most of which is now in Tier 3 or 4, and down over 90% year on year.

 

London has fared worse, down 71.1% year on year, while the rest of the country is down 61.9%. These figures in the capital are due to drop even further to full lockdown levels, given the recent announcements regarding further restrictions.

 

Richard Hartley, Chief Product Officer commented: “the everchanging covid restrictions continue to have a damaging effect on the industry as expected, and Christmas this year is now set to look even more uncertain than previously expected.”