Just over a month since restart, it is obvious that the sector’s revival will take time, and sadly it will not include everyone. The second edition of the Market Recovery Monitor from CGA and AlixPartners, published this week, shows that fewer than two thirds (62%) of the country’s licensed premises were trading again by the end of July, highlighting the caution with which businesses approached reopening since 4 July. As you might expect, there are variances across regions, segments and different types of outlet; some parts of the market have reopened faster week on week, some are taking longer to reopen, and others may not do so at all. The latest figures underline that the shape of the recovery is not straightforward and will be dictated by many factors.

Overall, the reopening process has been relatively slow and steady. Seven days after the sector in England was given the go-ahead to reopen on Saturday 4 July, only two in five (41%) of all venues had opened their doors. This reflects many operators’ decisions to opt for staggered rather than wholesale reopening, as well as the logistical challenges to opening sites such as restarting their food and drink supply chain and implementing safety protocols.

A fortnight after relaunch, more than two thirds of food pubs (69%) and high street pubs (67%) had opened their doors, compared to only two in five (41%) casual dining restaurants. This month’s launch of the Chancellor’s flagship Eat Out to Help Out initiative has been welcome and may have helped provide additional comfort to operators considering the required level of sales to break-even, with many reporting a positive impact on early week sales during the early phases of the scheme.

Currently pubs are leading the charge, benefiting from consumers’ desire to stay closer to home immediately after lockdown and (in some cases) the ability to trade from significant outside spaces. At the same time, casual dining and restaurant operators are taking a much more cautious approach. Almost nine in ten food-led pubs have reopened compared to March pre-lockdown levels; by contrast, just 56% of full-service restaurants and 63% of casual dining restaurants have opened their doors. We expect these figures to increase during August, in part due to the impact of Eat Out to Help Out and the benefit of the cut to VAT.

It is worth noting that when it comes to restructuring processes, it has been the leasehold, and generally city/town centre and shopping centre-based restaurant estates that have so far made up the majority of cases. Headlines over the past few weeks have been dominated by news of these businesses permanently shuttering sites or restructuring and our view is more of these processes will emerge in the coming period. It has also meant that the likes of the Azzurri Group – ASK Italian and Zizzi (now owned by Towergate); and The Big Table Group owned by Epiris (formerly Casual Dining Group) business – Bella Italia, Café Rouge and Las Iguanas, had their reopening programmes influenced by their investment processes, but both are up and running in August.

The Market Recovery Monitor also highlights variations in the reopening of the eating and drinking-out sector from region to region, and significant challenges for London in particular. Nearly three quarters (73%) of sites are now open in the North East and South West of England, for example —12 percentage points more than in the capital (61%), where a steep fall in office workers and tourists has prompted many businesses to stay closed, and many others to open only parts of their estates and with reduced trading hours. It will be interesting to see over the next few weeks whether the Government’s change of advice in encouraging people back to the office results in greater commuter footfall in large cities, which might encourage operators with sites in those locations to reopen. While footfall in London, for example, has picked up gradually in recent weeks, it remains well below the levels required for city centre venues to operate profitably. I was struck by the comments from Youngs’ CEO Patrick Dardis last weekend, who said the performance of central London and the City was dragging trading down; “It’s a real struggle but we’re going to stay open”. It will be very interesting to see in future editions of the Market Recovery Monitor how the ‘Great Return’ to the office and increased use of public transport translates into site reopenings.

The big question remains: How far will outlet numbers return to pre-Covid levels and where will the market end up? Yes, the last few weeks has seen a shift in momentum and site openings can be expected to rise through this month - but there is still huge levels of uncertainty at play, with talk of trade-offs between reopening pubs and schools and greater powers for councils to enforce ‘local lockdowns’, as well as the impending end of the furlough scheme.

Ultimately, the saying ‘never let a good crisis go to waste’ holds true; the last few months have been an accelerant to technology adoption and well capitalised businesses that are in a position to ride out this crisis may be able to make acquisitions at very keen prices and add value to their group. This crisis will see a reduction in competition, perhaps correcting the perceived overexpansion of restaurants in recent years, and it will also see property costs reduced as landlords compete for a smaller number of potential tenants. If demand rebounds sufficiently, these factors offer the potential for profitability to recover through 2021.