Insight: ‘The debt is increasing every day and it’s utterly unsustainable’ : The plight of pubs despite restrictions easing
The sound of cheering and the clinking of glasses inside pubs may be just around the corner as Scotland’s hospitality industry resumes service indoors in the majority of the country from tomorrow.
But the flurry of excitement has been tampered with worry and uncertainty for publicans as Covid-19 restrictions continue, not least in Glasgow and Moray, to hold a tight grip on profits.
Gavin Stevenson owns three hospitality venues in the north of Scotland and, unlike many of his customers, he is dreading the “full” reopening of pubs.
As of Monday, groups of six people from up to three different households will be able to meet for food and drink, including alcoholic drinks, in pubs and restaurants in level two areas.
But strict physical distancing measures, including a one metre rule between customers from different households and a 10:30pm curfew, will be in place – a “draconian” system that Mr Stevenson said will be “onerous and crippling” for a sector that has already been shattered by the pandemic.
The restaurateur said: “Every hospitality business in Scotland is on the brink of bankruptcy and reopening venues with physical distancing rules in place is going to ruin many, if they haven’t been forced to close already.
“We need these measures to be dropped as soon as possible – not just a partial reopening.
“I know customers are excited to get back to the pubs to drink, but I don’t think people realise how dire the situation is.
“And Ms Sturgeon and her government couldn’t have picked a worse comment for the sector by saying that people can meet for dinner parties indoors and hug in each others’ homes from Monday while pubs continue to face catastrophic financial losses.”
Mr Stevenson, who is vice-chairman of Night Time Industries Association Scotland (NTIA Scotland), said by April this year, each hospitality premises was, on average, £90,000 in debt, with larger venues facing debts of up to £150,000.
“These figures equate to about three years of profits per premises,” said Mr Stevenson, whose venues are in Aberdeen and Inverness.
“That means most of the hospitality industry owners are going to have to be running their businesses for free over the next three years before seeing any profit.
“While it looks like a ‘full reopening’ on Monday, the longer these physical distancing restrictions remain in place, the bigger the debt is going to get for us.
“The debt is increasing every day and it’s utterly unsustainable.”
Earlier this year, finance secretary Kate Forbes announced the Scottish Government would extend the 100 per cent business rates relief scheme for the hospitality sector until the next financial year.
The Strategic Framework Business Fund, which ended in April, also provided a monthly support payment of £2,000 or £3,000, and one-off grants of £6,000 or £25,000 – depending on the size of the venue.
But Mr Stevenson said with mounting debt over the past year, this financial support was just “a small fraction” of the losses incurred.
He referenced a survey completed by NTIA Scotland that revealed furlough alone costs the pub sector, on average, between £3,000 and £4,000 per month per premises with rent and other bills amounting to a figure between £10,000 and £15,000 per month.
“The physical distancing measures alone will mean that the majority of places will be running with just a quarter of their normal capacity, which means income will only be a quarter of what they normally expect,” he said. “That’s horrendous.
“And then you have the 10:30pm curfew, which cuts out that late night peak time which can generate half a pub or bar’s income for the day.
“The lack of understanding of the practical implications that some of these rules create is nonsensical and absurd.
“We have had unrelenting good news about vaccine performance being dramatically better than expected, and yet the Scottish Government’s ongoing failure to engage in meaningful consultation with the sector and provide a workable road map out of the pandemic is now resulting in tens of thousands of lost jobs.”
Level 3 restrictions continue for some
Despite the vaccine rollout success, council areas Glasgow City and Moray have been unable to move to level two as planned on Monday amid concern over rising Covid-19 case numbers.
Having been given the go-ahead for restrictions to ease, Nicola Sturgeon announced on Friday that both council areas would remain in level three for another week following concern over the Indian variant and a surge in cases.
Graham Suttle, who runs several bars and restaurants in Glasgow, including Lebowskis, Porter and Rye and The Finnieston, said the lack of advanced warning for the food and drink industry on whether or not they could resume indoor service has been “catastrophic” for businesses.
“Friday’s announcement just shows how last minute the government is with the hospitality sector,” he said.
“They tell us on a Friday that we won’t be opening on the Monday despite previously saying we could.
“The amount of places that have prepped all their food and been ready to go to then be told they can’t just two days in advance is crushing.
“There’s such a broad feeling of excitement in the air about reopening, but how can we be excited when there’s this constant level of uncertainty?”
Mr Suttle said Ms Sturgeon’s announcement in Parliament showed the “lack of awareness” about the greater supply chain involved in the food and drink industry.
“It’s a complete scramble every time the government does this last minute decision making,” he said.
“There are so many different suppliers from producers to farmers to breweries involved in the running of a pub or restaurant.
“At Porter & Rye we have an aging cabinet for the beef and fresh seafood orders to manage, and for them to expect us to turn everything around and be up-and-running in a matter of days, or to suddenly be told service isn’t going ahead as planned, is madness.
“I understand that the politicians didn’t have much choice at the beginning of the pandemic, but since last year we have been jumping up and down telling them to co-operate with us to come up with a better route map for the hospitality industry and it just falls on deaf ears.”
Mr Suttle said he fears the financial burden the hospitality industry carries in the wake of Covid will impact the quality of food and drink the country has to offer in coming months.
“As Scotland’s pubs and restaurants reopen over the next few weeks with such limited numbers and a major financial strain, it’s going to be almost impossible to meet and improve standards,” he said.
“If we don’t get more financial support restaurants won’t be able to afford their best produce. It won’t be the local beef from down the road in restaurants, it will be cheap, frozen meat from abroad.
“The government needs to listen to us and our needs at this critical point, but also give us the reassurance that it will support the hospitality industry properly and treat it as a cornerstone of the economy as we come out of Covid.
“If it doesn’t, there’s a risk we will lose our reputation, customers and visitors to the country.”
Low tourism levels
In a study by the Scottish Licensed Trade Association (STLA), figures showed that pre-Covid, 71 per cent of tourists in Scotland visited a pub.
But according to recent Scottish Tourism Alliance’s findings, interest in staycations and tourism is not on the rise this year as much as the group had hoped.
The study, drawn from a survey of 980 businesses and operators, showed that up to 45 per of accommodation providers have reported occupancy levels below 20 per cent for May, June and July – figures that Mr Stevenson and Mr Suttle said are a cause for concern.
Stephen Montgomery, of the Scottish Hospitality Group, said: “It’s all very well reopening indoors on Monday, but we need to relax these physical distancing rules and lift the 10:30pm curfew as soon as possible. And we certainly need to do this in line with our colleagues in England so we are able to take advantage of a summer trade of tourism from our friends in the rest of the UK.”
One pub hoping to welcome back tourists from next week is Captain’s Bar in Edinburgh, run by Pamela McGregor.
With a venue stretching about three metres wide and 15 metres long, the pub only has space for 12 people indoors under level two restrictions – a stark contrast to the crowd of 40 to 50 people that once crammed inside listening to live music before Covid hit last year.
“The obvious concern over the next few weeks when we reopen is the numbers,” she said, “because it will be about a quarter of what we normally would expect.
“But I am only going to reopen for Fridays and weekends to start with, so our opening date will be May 21.”
In an effort to keep the beer flowing, Ms McGregor is awaiting permission from City of Edinburgh Council to set up tables and chairs outside the venue.
“We should be able to get about 30 people seated outside if this goes ahead, and I am fairly confident it will,” she said.
“I do consider myself one of the lucky ones though because I can work with a bit of outdoor space. There will be other small venues across the country that won’t be able to reopen with these restrictions in place and that won’t have a beer garden.”
Only 30 per cent of pubs in Scotland have an outdoor seating area, according to SLTA, which includes venues with a small number of tables and chairs outside their premises.
A spokeswoman from Edinburgh council said it hopes to be more lenient about pub staff setting up chairs and tables outside venues over the next few months.
Ms McGregor added: “From Monday some landlords, including Heineken who own our building, are putting the rents back to almost full cost which is going to put a lot of pressure on small venues to have to reopen, despite the seriously limited capacity.”
Stars Pubs & Bars, which runs Heineken, confirmed some tenants have been paying just 10 per cent of their rent but, as of Monday, all their pubs in Scotland will return to paying 90 per cent of their costs.
Being a flagship venue for live music, which has also been a key source of income for her pub, Ms McGregor said the lack of information about when musicians can return is a concern for the small, traditional watering holes across the country.
“I know that in Edinburgh musicians aren’t allowed to play outside on the street, but I think with Covid turning most businesses inside out and forcing our customers and service outdoors, that rule should be revised,” she said.
Feeling a bit more positive
Despite Moray’s “uncontrolled” outbreak and news of the council area remaining in level three for another week, the team at The Craigellachie Hotel are in good spirits about news of Scotland’s hospitality industry reopening.
Executive chef managing director Will Halsall said staff are “hungry” to get back to more business in coming weeks.
“There is not one staff member that hasn’t walked through the door without showing total excitement about being back,” he said.
“You can really feel it in the air now.
“It’s been a really tough year, but we’ve stayed strong and we are ready to welcome customers back to our outdoor terrace and indoors whenever it’s permitted to do so.
“It really feels like normality is just around the corner.”
The hotel’s pub – The Copper Dog – will still remain under an 8pm curfew with no alcohol permitted indoors, but a full service outside.
Mr Halsall added: “Luckily throughout the lockdowns we developed a great outdoor terrace with a heated area, which makes eating and drinking outside much more enjoyable for customers, so we can still keep up a good service under level three.”
When asked about whether or not he feared the recent surge in cases in Moray would lead to another lockdown of the hospitality industry, he said: “We can’t go back into another lockdown.
“People have an appetite to get out and meet up with their friends and family and we have shown that we can do that in a safe way.
“I can understand the need to be cautious at the moment, but you have to think positive, and I am confident we won’t go back to tougher restrictions.”
A Scottish Government spokeswoman said: “We do not underestimate the severe impact this pandemic has had on hospitality businesses, but we must move very carefully to ensure continued suppression of Covid-19.
“Indoor hospitality is progressively reopening at each level while local licensing conditions apply for outdoor hospitality spaces.
“The Scottish Government is reviewing physical distancing more generally and we will set out the conclusions of that at the next review point.
“We have always said we will keep plans under review and accelerate the lifting of restrictions if possible, and we will continue engaging with the sector on this.”