UKHospitality Says Poor Festive Trading Hits Hospitality Revival Hopes As Cash Reserves Are Further Depleted

A christmas tree - Unsplash Eugene Zhyvchik
UKHospitality Says Poor Festive Trading Hits Hospitality Revival Hopes As Cash Reserves Are Further Depleted

New data from UKHospitality and CGA shows sales in pubs, restaurants and bars down 60% on Christmas Day, 31% on Boxing Day and 27% on New Year’s Eve, compared to 2019

Latest figures from the pub, bar and restaurant market reveal how the hospitality market suffered devastating sales falls in the last week of the year. What would traditionally be a bumper sales period for thousands of hospitality businesses is likely to be remembered as a lost chance to rebuild crucial cash reserves in the sector – delaying the recovery and leaving many businesses exposed going into the fallow winter months.

Sales were a massive 60% down on Christmas Day as customers opted not to dine out, while Boxing Day sales fell by a third (31%) and takings on New Year’s Eve – one of the biggest individual trading days in the calendar for many venues – were down by more than a quarter (27%).*

The depressed figures captured by UKHospitality and specialist insight consultancy CGA represent a ‘lost Christmas’ and cap off a devastating December.

Based on a separate industry survey, the wider hospitality sector will have seen a 40% drop in sales overall for the month versus the same period in 2019 – the last ‘normal’ Christmas before the onset of the Covid-19 pandemic.  The frightful festive figures represent a £3bn hit to the industry, versus 2019.

Venues in Scotland and Wales were hit even worse in the week leading up to New Year, where more stringent restrictions were in place. The sector in Wales performed twice as badly as England, and in Scotland 2.5 times worse, in the week ending 1st January 2022.

Overall, the findings demonstrate how the industry’s fight to recover from the pandemic has been severely hampered by Omicron. In the weeks prior to the new variant emerging, average sales had been recovering steadily through the autumn and were close to pre-pandemic levels (98%).

Commenting, UKHospitality CEO Kate Nicholls, said: “December is a vital period for hospitality businesses, equal to three months’ worth of trading for many. These new figures are crippling for an industry already struggling but also spell disaster for the wider UK economic recovery, as ONS figures showed that overall growth in Q3 was driven by hospitality.

“These sales drops versus 2019, and also against our members’ projections before the onset of the new Omicron variant, will have taken most businesses from healthy trading for the month to painful losses, delaying the sector’s recovery and extending hospitality’s long covid. Cash reserves are severely depleted, and some businesses will struggle to survive the first quarter of 2022.

“This dreadfully disappointing December has further stymied our ability to deliver jobs, growth and investment at pace, which we all know is so crucial to the recovery of our economy overall.”

Companies operating groups or ‘chains’ of pubs or restaurants fared slightly better than independents, according to data analysed from the CGA Managed Volume Pool which is based on actual sales from 5,500 pubs, bars and restaurants, operated by multiple-site businesses.  These venues, which are typically larger and better invested, saw sales fall a third in the week up to Christmas and by around a fifth in the week up to New Year.

Hospitality is facing significant headwinds in 2022, compounding a challenging outlook for thousands of businesses and millions of workers. Sector businesses face a cliff edge in April when VAT is set to return to 20%, plus a rise in business rates and labour costs.

All this, on top of soaring energy costs, the growing cost of food and drink and an end to the rent moratorium.

Kate Nicholls added: “A pivotal moment for the recovery is approaching. As recent quarterly GDP figures show, the hospitality sector can play a leading role in driving the recovery.  Crucial to this is the right support and keeping VAT at 12.5% will enable the sector to safeguard jobs and crucially, it will help keep down costs for our guests amid some very strong inflationary pressures.  Reducing rates bills in 2022/23 will also be important in enabling businesses to recover again.”

*Data sets compared cover entire trading weeks for the month of December. Time period for 2021 figures was 29 November 2021 to the 1st of January 2022 versus the 2019 figures, which were taken from 1st of December 2019 to the 4th of January 2020