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Hospitality Takes a Major Hit Under Lockdown

The government is trying to keep business afloat, but the future of the hospitality industry remains uncertain

Damascu Bite is an established Middle Eastern restaurant in the heart of London’s East End. For nearly 20 years, it has offered authentic Syrian dishes and a leisurely dining experience. 

The popular spot has now been closed for eight weeks due to the COVID-19 pandemic. 

The restaurant is currently under refurbishment and plans to reopen by mid-June and when it does, it will also sell pizza, and operate purely on a take-away basis. 

Sammy Malik, Damascu’s manager, says the restaurant business is in for a rough ride for the remainder of the year and must adapt in order to survive. 

“We’ve lost money through this lockdown, we’ve lost customers, and we’ve put staff on furlough,” says Malik. “When we reopen we will only need half the guys.” 

The hospitality sector has taken a particularly hard hit during the COVID-19 pandemic. 

Hospitality reflects struggles in the whole economy

A recession is imminent in the UK, according to Chancellor of the Exchequer, Rishi Sunak. The global economy is expected to shrink by 3 per cent — suggesting this economic slump could be even worse than the 2008 financial crisis. 

For hospitality workers, the impact was immediate: in the UK, 75 per cent of hospitality companies closed entirely when the lockdown period began. The third largest employer in the UK, the hospitality industry saw 84 per cent of its workforce (2.5 million people) furloughed. 

Economic projections of the hospitality industry in Britain

According to Kate Nicholls, chief executive of UK Hospitality, the sector was one of the first hit by lockdown — and is likely to be among the last to emerge from it. 

“Even when lockdown lifts, social distancing measures are going to make it very difficult for many venues to operate…Those that are able to open will be operating at a fraction of normal capacity, so some businesses will find it economically unviable.” 

Kate Nicholls

At the start of the crisis, Sunak had discussed a quick recovery for the economy, even naming one of his key economic packages for supporting small businesses the “Bounce-back Loans Scheme”. 

Though the Bank of England expects the economy to contract by 14 per cent in 2020 — the highest rate in more than 300 years — it does expect a recovery in 2021 and beyond. 

Both Sunak and the Bank of England have taken unprecedented actions to step in and support economic activity. 

Over £220bn is being borrowed in global markets to support various schemes such as the Coronavirus Jobs Retention Scheme, which helps employers pay up to 80 per cent of employees’ wages while their place of work is closed, and the Coronavirus Business Interruption Loan, which provides small and medium-sized businesses with financial support to keep them afloat during the crisis. 

Long haul ahead for the sector

Nicholls says the extension of the furlough scheme has helped the hospitality industry overcome the initial crisis. Still, she worries some employers will struggle even after lockdown lifts. 

She insists the furlough scheme needs increased flexibility in order to allow staff to return to work in a safer, gradual way. “We can’t be expected to go from a standstill to full pace overnight,” she says. 

At Enso, a Thai and Japanese restaurant in east London, all waiters and bartenders have been furloughed; however, manager Artur Wilke says that six of Enso’s servers will not return once lockdown eases. This is because Enso has decided to focus on delivery, rather than in-house dining due to the uncertainty surrounding social distancing measures. 

“We don’t see how it can work.”

Artur Wilke

Prime Minister Boris Johnson has suggested the hospitality industry could reopen by 3 July. But even when restaurants, pubs, and hotels do open, operations will be different: venues will have to lower the maximum number of customers served and make sure that all employees and customers maintain a two-metre distance. 

Restaurants like Damascu and Enso are taking measures to adapt to these unprecedented times. But the hospitality sector is a long way from business as usual.

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