A trading update from members of the Scottish Hospitality Group, made up of 10 of Scotland’s most successful hospitality businesses, showed they took in only 20% of last year’s earnings during the vital Christmas trading period a drop of £9.6m over December compared to last year.
The Scottish Hospitality Group comprises many of the country’s largest and best-known restaurant and bar businesses, including The DRG Group, Buzzworks Holdings, Signature Pubs, Montpeliers, Manorview Group, Lisini Pub Co, Caledonia Inns, G1 Group, The Townhead Hotel Lockerbie, Mor-Rioghain Group, and Caledonian Heritable.
Collectively they have 200 outlets, each of which lost on average £12,000 per week which means that this year they saw revenues slashed by 80% – a £9.6 million drop. Usually (in a normal year) the group have a turnover over £275m a year and are responsible for 6,000 staff.
The massive cut in revenue will impact on payments for property rent, utilities and equipment rent until at least the summer, affecting suppliers, investors such as pension funds, and others who depend on the industry. It will also throw into doubt existing plans for £30m of investment in 27 premises which would create hundreds of new jobs as well as protecting existing ones.
During the lockdown, businesses continue to spend on average nearly £6000 per week per premises on fixed costs and contributions to the furlough scheme. Meanwhile, much of the promised support has yet to come through and it is unclear even what businesses are entitled to due to conflicts between the Holyrood and Westminster governments.
Stephen Montgomery, spokesperson for SHG, said, “Without Christmas, when we earn around 30% of our entire annual income, most hospitality businesses just aren’t viable. We’ve had the worst December’s trading in living memory and we’re facing the worst start to a year ever. Instead of helping, our political leaders are squabbling with each other. It’s like arguing about who throws the lifebelt when someone’s already underwater.
As well as confusion about the support available to businesses, there are major delays between funding being announced and it being paid out.
Stephen added, “The continued furlough scheme is welcome but it’s there to protect jobs rather than businesses, and we still have to pay all sorts of fixed costs. Even those businesses that survive will seriously struggle to recover this year. Not only is the support completely inadequate, in many cases what little is available hasn’t appeared months after it was promised.
“We will soon be proposing specific, realistic measures that both governments can introduce so we’ve got a fighting chance of getting back on our feet by next year. First of all though, we need them to grow up and start working together so that the hospitality sector still exists to drive our economic recovery once the virus is under better control.”