D&D owner: Tax supermarkets to bail out bars and restaurants
In his second City A.M. column, D&D London CEO and cofounder Des Gunewardena reflects on the “horror show” of the last week, asks the government to consider a Covid-tax to help struggling restaurants, and offers his empty venues up as Covid vaccination stations.
We have had some bad weeks during this pandemic, but last week may have been the worst. It started with the announcement that the whole of London was to be placed into Tier 3. We are regularly briefed by our industry body, UK Hospitality, which is in daily touch with the government. On Friday we were confident that Central London, where infections were still relatively low, would remain in Tier 2, even if a number of outer boroughs went into Tier 3.
But some “alarming data” we are told resulted in the whole of London going into a higher tier. Our restaurants in London therefore all closed after Tuesday night. This was a sickening blow to lose trading in the busiest two weeks of our year. We, like many restaurant groups, make some 30 per cent of our annual profits in December. This year we will all lose money. And we face going into the traditionally bleak winter months of January and February not with our coffers full of cash but with increased bank debt. Fortunately we at D&D have strong and supportive shareholders and banks. Others are not so lucky. We have already seen some high-profile casualties, particularly in casual dining. And a lot more will surely follow in the new year.
If the start of the week was terrible, the end of the week was a genuine horror show. Seemingly alarmed again by the data as it emerged during the week Boris announced to the UK that our 5 day Christmas easing of restrictions was to be shelved. An action which the government only a week before had dismissed as being “inhuman” was now being taken. The British public will, in the interests of defeating the virus, of course comply with these draconian rules. We have no option.
Restaurant and pub owners through the last few months have continually protested directly and through the media that our venues are not where Covid infections are happening. With all our PPE, temperature checks, masks and more, we have created Covid-safe environments. Covid infections took off not when restaurants and bars reopened in July but when schools and universities returned in September. Our protests have fallen on deaf ears.
Now, with Covid infections spiralling once again out of control, we have to play our part, whatever the facts. This will no doubt continue until we have regained control of Covid, which may not be until most of the UK is vaccinated. We need, therefore, to alter our dialogue with the government.
What role can we play in speeding up the rollout of the vaccine? If we are not allowed to open maybe our restaurants can be temporarily used as vaccine stations. After the catastrophe of December trading, we also need to address with the government the question of compensation and financial support for the industry.
Some of the industries hardest hit by Covid – aviation, hotels, property – consist mainly of large, multi-billion revenue or asset-owning companies. The restaurant industry is not like that. We are owner-operated businesses, and even larger groups like D&D are minnows compared to our equivalent companies in those industries.
The government believes that it is already doing a lot. But when you close an industry down you have an obligation to compensate it for the losses it incurs as a result of your policies. Take lockdown: the government takes on the cost of staff through furlough, and we have no business rates to pay. But that still leaves a restaurant owner with its fixed operating costs such as utilities, maintenance, core management team, and of course rents.
For us that lot adds up to around 20 per cent of normal revenues. In a normal month we will make a profit of 10 per cent. But in any month we are closed we lose 20 per cent. And we’ve had five months closed in 2020, with perhaps more to come in 2021. We need to be compensated. How should this be funded? For a start by withdrawing reliefs or introducing a Covid-tax on the businesses that have benefited from the miseries of 2020 – supermarkets, online retailers, delivery companies, PPE distributors.
However it is funded it is vital that restaurants are properly compensated as they are in other countries such as France and Germany. The hospitality sector is a powerful engine for driving economic recovery and employment post-Covid. Pubs and restaurants are also vital to the social fabric of the UK. They need to be properly supported. That needs to be our agenda for 2021 as we say goodbye to the fiasco that was 2020.