Spending data suggests trips to the pub still lagged pre-lockdown averages

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Consumers in England put their hands in their pockets over the weekend as spending on pubs and hairdressers came roaring back on Super Saturday – but spending is nowhere near normal levels.

Despite scenes of packed crowds outside bars, clubs and pubs in Soho in London, data from banks and payment processors reveals spending in previously locked down sectors still lagged long-term averages.

Figures from Barclaycard, which processes around £1 in every £3 spent in the UK, and Britain’s biggest bank Lloyds found an immediate spike in transactions over the weekend as pubs reopened and pent-up demand was released. 

There were pictures of packed crowds outside bars and pubs in Soho in London on Saturday (above), but data suggests spending over the weekend lagged pre-lockdown levels

There were pictures of packed crowds outside bars and pubs in Soho in London on Saturday (above), but data suggests spending over the weekend lagged pre-lockdown levels

Barclaycard said there was a 295 per cent increase in how much was spent in pubs and bars on Saturday and Sunday compared to the same period the week before, when they were shut but many were offering takeaway drinks, while Lloyds found a 343 per cent increase. 

But although some pub owners told the industry trade magazine the Morning Advertiser they saw more takings than usual, the data suggests spending and takings still lagged pre-virus levels.

Barclaycard’s data said total spending across hospitality, leisure and entertainment was still down 45 per cent on the same weekend in 2019. 

Labour leader Keir Starmer enjoys a pint in London on Monday

Labour leader Keir Starmer enjoys a pint in London on Monday

Lloyds’ figures, which include customers of Halifax and Bank of Scotland, found pub spending was 65 per cent below average levels seen in February and restaurant spending 55 per cent lower.

And the chief executive of industry body UK Hospitality told us most of its members saw lower trading, and if that continued businesses would be loss-making for the foreseeable future.

Although the immediate bounceback is encouraging, the figures show just how far the UK economy has got to go to recover from its deepest recession on record, and how the Chancellor Rishi Sunak cannot afford to ease off the stimulus pedal. 

A targeted cut in VAT aimed at the hospitality industry one of the measures reportedly under consideration in his emergency update today.

Sue Rathmell, a VAT partner at accountants MHA MacIntyre Hudson, told This is Money she wanted to see a VAT cut aimed at hospitality and tourism, which she said ‘is practically on its knees’.

The closure of bars, hotels and restaurants and the rest of the hospitality industry is one of the reasons why a record amount of money has been saved over the last few months. More than a fifth of household spending, £182 a week on average, was prevented by the lockdown. 

‘Most people have just been so onboard with any changes made’ 

While a small minority did their best to try and take the shine off ‘Super Saturday’, on the whole the cathedral city of Canterbury saw widespread compliance with social distancing rules, residents said.

The Kent city, which has around 25 pubs and bars in its city centre, saw police called to one central pub after trouble caused by what one resident said was ‘a small pocket’ of people.

But Oli Nonis, the managing director of Akon Security, which provides door security for many city centre venues, told a local Facebook group ‘the majority’ of people behaved themselves.

The cathedral city of Canterbury, Kent, has around 25 pubs in its city centre, many of which reopened last week

The cathedral city of Canterbury, Kent, has around 25 pubs in its city centre, many of which reopened last week

He said: ‘I was sceptical of how tonight would go but after having been around the city and seeing how well organised everywhere was and how the majority of the public were respecting the new regulations put in place, I was massively impressed and felt proud of the city. 

‘So much work and planning has gone into the reopening of the town’s restaurant and bar trade and that was evident tonight.

‘Sadly, the incident that occurred is not a true depiction of the night and does not deserve to be the photo that people remember from today.’

He said trouble was limited to the one spot which failed to put in place social distancing measures. 

One Canterbury pub which did reopen at the weekend was The Drapers Arms

One Canterbury pub which did reopen at the weekend was The Drapers Arms

Not all of the city’s pubs have reopened, with some unlikely to open for another month, but one which did said the new measures put in place to try and contain the coronavirus outbreak were ‘well received’ by the public.

India Marsh, 28, the deputy general manager of The Drapers Arms, told This is Money: ‘We saw many London visitors, obviously escaping the city to enjoy a more peaceful environment.

‘We had more diners than usual; people were clearly enjoying having somebody else cook and do the washing up for potentially the first time in three months.’

Asked what measures had been put in place, she said: ‘We’ve encouraged bookings, but they’re not compulsory. We have all table service inside, discouraging people from moving around unnecessarily.

The pub's deputy general manager said it had gone cashless, and had implemented other distancing measures like doing table service for all customers inside

The pub’s deputy general manager said it had gone cashless, and had implemented other distancing measures like doing table service for all customers inside 

‘Outside drinkers and diners order at the bar, whilst not crowding. People are asked to “check in” to comply with the NHS contact tracing measures, and we’re also cashless. Tables, chairs and menus are sanitised as soon as customers leave, and there’s nothing placed on tables.

‘It seems like a lot, but it’s been received well so far’.

She added: ‘People have been reading the news more than ever, they know to expect changes in the way things are operated. Most people have just been so onboard with any changes made.

‘They recognise that it’s to keep themselves and our staff safe.’

Those mothballed parts of the economy are more often frequented by those on higher incomes, who have been able to save more as a result. The economy needs these sections of society to spend again in order to get back on its feet.

Figures from the digital bank Revolut, which has 3million UK users, albeit ones who are younger and likelier both to live in cities and have more disposable income than the UK average, also revealed a similar picture.

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It saw a 200 per cent rise in all consumer spending on Saturday compared to the average amount spent between 23 March and 30 April, the height of the coronavirus lockdown.

Restaurant spending was up by a lower amount, with Lloyds finding spending up 11 per cent week-on-week and Barclaycard 13 per cent.

This could be due to social distancing measures limiting the number of diners allowed in restaurants, people feeling uncomfortable with either the new measures or sitting inside in public for several hours, or the fact many restaurants have already adapted to the virus by offering takeaways over the last few months.

The data, which covers spending in the whole of the UK and therefore includes Scotland and Wales, which had not reopened hairdressers, pubs and restaurants, is the first indication as to whether consumer spending did bounce back by as much as the Treasury may hope.

Spending on a snip: 

As well as the pub, Saturday and Sunday saw a big jump in spending in hairdressers and barber shops.

Over the last few months, Britons have either had to cut their own hair, get a family member to do it, or deal with not being able to have it cut, as barbers and haridressers were closed amid the pandemic.

They were allowed to reopen again, after stories of appointments being booked out weeks in advance and customers desperate for a trim ringing up at all hours.

Perhaps unsurprisingly, Barclaycard found spending at those hairdressers which used it to process card payments was up 147 per cent compared to the week before, and Lloyds found spending was up nearly 200 per cent.

And although hospitality spending still lagged pre-lockdown averages, Revolut’s data found spending on hairdressers was up 23 per cent compared to February, and the average amount being spent was also higher.

With new social distancing rules in place, customers have often been required to pre-book appointments or pay deposits, rather than simply just walking in. Lloyds Bank data found online spending on hairdressers rose 121 per cent on pre-lockdown figures.

An estimated 45 per cent of the pubs which could reopen over the weekend did so, according to the data provider CGA. 18,277 out of 40,575 did, which did not include pubs in Leicester, which has once again been locked down after a recent increase in coronavirus cases. 

Revolut, which found its cardholders were buying bigger rounds at the pub than before the lockdown, said spending was down 52 per cent on 8 February, a ‘usual’ pre-lockdown Saturday.

And the pub and restaurant industry, having already been among the hardest hit parts of the economy, has a mountain to climb. 

Separate Barclays data taken from the bank’s credit and debit card spending found spending on hospitality collapsed 85 per cent year-on-year during the most severe part of the lockdown in April.

The chief executive of UK Hospitality, Kate Nicholls, told This is Money: ‘The response from our members has been broadly positive, but footfall and occupancy have both been low. 

‘Trading was about 40-50 per cent down and city centre locations tended to be quiet.

‘If this continues, businesses are likely to be trading at below breakeven for the foreseeable future.’

On Saturday 120 hospitality bosses signed an open letter to the Prime Minister calling for tax cuts and more government support to help the sector. 

Simon French, chief economist at investment bank Panmure Gordon, said the figures called into question the idea there would be an immediate ‘v-shaped’ recovery in the economy.

UK Hospitality chief executive Kate Nicholls: 'If this continues, businesses are likely to be trading at below breakeven for the foreseeable future'

UK Hospitality chief executive Kate Nicholls: ‘If this continues, businesses are likely to be trading at below breakeven for the foreseeable future’

He said: ‘The fall in spending for pubs shows how much their pre-coronavirus economics are not sustainable. 

If you assume profit margins at 10 – 20 per cent then this is making some fairly severe employment reductions to balance the books. 

‘You would expect it to grow from here assuming confidence steadily returns and more venues open up, but it rather calls into question any idea that there will be a v-shaped rebound.’

He added: ‘The big question here is whether the job retention scheme, business rate exemptions and government grants need to be extended to stop a lot of these establishments throwing in the towel.’

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