The hospitality industry is entering a period of relative calm, with attention now turning to medium and longer term challenges, KPMG’s Will Wright has told MCA.

Wright, of KPMG’s restructuring practise, said with the immediate crisis cash management issues dealt with, as businesses are mothballed and staff furloughed, operators must now consider the state of their businesses when they emerge from the crisis.

Wright said: “There’s a period of calm now, believe it or not, because the majority of the immediate issues have been dealt with

“Whilst there’s some great support available from the government, this doesn’t negate the need to make payments for costs during this period.

“Ultimately that’s going to come out in lower profits or higher losses, and will have to be funded at some points, so that’s the longer term issue, which is pretty significant.”

Wright said it was unrealistic to expect landlords to cancel rent, though acknowledged many operators had deferred payment.

He said: “At the moment, very few people have paid their rent, but very few landlords have agree to write it off. That’s a big decision for a lot of landlords, and I don’t see it happening any time soon. At the moment its all deferral rather than write off.

“Whether this means there will be more CVAs to deal with legacy labilities? You could see it happening.”

Wright said more administrations were inevitable, following Food & Fuel, Chiquito and Carluccio’s, but said the government’s measures would slow the surge that could have resulted otherwise.

The big problem now the short-term threat has been addressed is longer term uncertainty, Wright said, with the length of the lockdown and costs of closing unclear.

He added: “Everyone is in the same boat, which perversely is quite helpful. But you can’t get away from the point that if you had a marginal business before, it’s now a loss-making business. This will ultimately wipe out the weaker operators. I think we will emerge in a very different place.”

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