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.”

Joint Research Between S4labour and Tenzo identifies 98% rise in takeaway sales, but has little impact on overall decline of hospitality like for likes. 

15.12.2020

Joint research from hospitality software providers S4labour and Tenzo the business intelligence specialists, reveals that despite a 98% year on year increase in takeaway sales during the first full week of trading since lockdown 2.0, eat in sales slumped 50% over the same period, resulting in a 46.7% overall decline in year on year sales, comparing last week with the same week in 2019.  The research by S4labour and Tenzo was done in conjunction with each other to highlight the plight of the industry and help forecast trends for 2021.

Taking a look at the whole Covid period between March the 20th to the 21st of December, the hospitality industry has suffered a sales decline of 56.5% on the same period in 2019, the majority of this driven by lockdowns and the Tier system. During the periods of the year with the least restrictions, between July and September, sales were down just 7.5% year on year.

Christian Mouysset, CEO at Tenzo, the business intelligence and forecasting platform for hospitality, commented that “Unfortunately, restaurateurs can no longer rely on eat-in sales. With changes to restrictions happening so often and at such short notice, the only way for restaurants to recoup revenue is to focus on diversifying their offering by focusing on the delivery and takeaway channels.’

Alastair Scott, MD of S4labour and Malvern Inns added “Covid-19 and the various restrictions on hospitality have been devastating. The innovation in take-away and the speed at which operators have adapted has been remarkable. While take-away will have helped some operators keep their heads above water, the model doesn’t work for many. News that London is going in to tier 3 this week will be devastating, for those who would not have been able to plan for such an abrupt end of trading. “

Tiers 1,2 and 3 down  30%, 39.2% and 77.8% respectively.

Analysis from S4labour shows that sales in Tier 1, 2 ad 3 venues are down 30%, 39.2% and 77.8% respectively year on year.  As we expected, the tougher lockdown restrictions have been disastrous for the sector, however there is also proof in Tier 2 that despite greater restrictions on average than before lockdown (most areas in Tier 2 came from either Tier 1 or 2 in October/November), that some consumer confidence is there. A lower post-lockdown effect can be seen than previously expected, as pent up demand for hospitality drives sales yet restrictions preventing households from mixing indoors curbs sales as the cold December kicks in. The new rules concerning eating are also affecting overall sales, as going out for a drink no longer becomes an option, and a trip out becomes more expensive. As expected food sales are down by less year on year at 18.9%, whilst drink is down 49.6%.

It must be noted that whilst these figures compare sites that are open; 25% of Tier 2 sites are still closed, and 91.7% of Tier 3 sites are closed. Take these venues into account and the overall figures are much worse.

Richard Hartley, Chief Product Office at S4labour commented:” We can fear that with these levels of sales that a lot of venues will struggle to be profitable. The number of sites not open shows just how catastrophic the current restrictions are for the industry. This is a time that hospitality normally thrives and many organisations rely on December revenues to get through January and February.”

Hospitality industry loses 94% of sales over lockdown

Analysis from S4labour shows that through lockdown 2.0, hospitality sales in sites that were trading in England were 80% down on pre lockdown levels and 96.5% down year on year. It should be noted that on top of these figures, 32% of sites did not trade at all, so the actual cost to hospitality during the lockdown was 94% of revenue.

Takeaway sales were low during lockdown, indicating that for most sites it was not feasible or profitable to pivot business models.

Sales figures from the few days before lockdown indicate that consumer confidence in hospitality is high, and pent up demand will mean that the few days coming out of lockdown are likely to be busy.

Alastair Scott, Managing Director at Malvern Inns commented: “Most operators do not have the infrastructure or the business models to run takeaway sales at a profit and the government cannot expect the industry to rely on such sales for survival. As lockdown-esque restrictions linger further into December, it is not looking promising for an industry that relies on Christmas trading to get through the next year.”

S4labour downgrades hospitality sales forecast in December to -45% in wake of toughened tier restrictions.

S4labour have undertaken research to help operators forecast sales as lockdown 2.0 comes to an end and England and returns to the tiered system. Originally the research showed a relatively optimistic outlook, with the pre lockdown bounce indicating strong consumer confidence, however the recent announcements regarding a toughening of trading conditions for the majority of operators has significantly dampened the forecast.  

The research undertaken by S4labour has analysed a range of data sets including historic December sales uplift, the Welsh post lockdown experience as well as the impact of the three tiers on trading.

During any normal December, we would factor in a circa 40% month on month uplift in sales, however, for the majority of operators this year, the work parties and general public splurge requires a significant down forecast.

Welsh operators enjoyed a 60% uplift in sales coming out of lockdown 2.0 compared to pre lockdown trading, a figure that would have indicated operators across the rest of the country could be optimistic about the easing of Lockdown 2.0 next week. However, with Wales emerging from its lockdown in conditions similar to England’s tier level 1, few areas in England will see anything like this growth.  

By looking at the historic impact of the tiers on sales, and accounting for the increased restrictions in each tier, S4labour has concluded that operators in tier 1 could forecast a December that is 50% up on October sales this year, but still 25% down on December 2019. Those in tier two, whose trading conditions are much like those in the previous tier 3, can forecast sales that are up 10% up on October sales this year, down 45% on last year. However, those leaving lockdown and entering tier 3 are unlikely to see any month on month growth from October this year, with only a marginal uplift on November. For many operators in tier 3 opening will not be feasible, but for those who do, it is possible that they will see an 80% decline in yearly like for likes.

Chief Product Office Richard Hartley commented: “The lockdown 2.0 was bitter pill to take for many operators, but for many, there was an optimisms that we would emerge into a Christmas period with significant demand. The additional restrictions on trade and the volume of operators who are in tiers 2 and 3 have quickly evaporated any hope of a buoyant end to a terrible year for the industry.”

Lockdown 2 versus lockdown 1

Analysis from S4labour shows that sales in the hospitality sector this week, Monday to Wednesday, were up 3.1%, 35.3% and 39.1% respectively, on last week, with tier 1 sites

up -9.1, 18.1% and 25.8% for each of the three days and tier 2&3 sites up even more at 25.1%, 63.4% and 59.3% respectively. This can only be described as a last rush to hospitality venues for a last visit before lockdown.

By comparison in the March lockdown sales dropped by 13.2%, followed by -45%, -60%, -65% and -75% in the days up to lockdown on March 20th when comparing with the week before.

Alastair Scott, CEO of S4labour and Managing Director of Malvern Inns commented: “I find the psychology of the second lockdown fascinating. Whereas in the first lockdown everyone wanted to follow government advice ahead of the lockdown this time the consumer reaction has been the complete opposite. This seems to demonstrate a lack of public support for the government actions. I suspect, or hope, therefore that when the industry opens up again it will be with immediate pent up demand rather than the rather timid excursions after lockdown no1.”