The return of the leisure sector

By Clotilde Gros

The leisure sector is reopening its doors to the public today, with outdoor trading, and is ready to catch up on the lost trades from the numerous lockdowns. This is great news for the industry, who will welcome the opportunity to finally drive footfall and sales.

Since March 2020, it is estimated that the industry lost just over £89bn in revenue (source: S4labour). This is equivalent to 68.9% of annual revenue, representing an average decline of £500,000 per site across the UK. The enforced closures meant that key trading periods were lost, leading to significant financial pressures on business owners and furloughed staff.

Since then, some operators have had to launch painful restructurings to ensure they were lean and fit to survive the pandemic. According the British Beer & Pub Association (BBPA), pub operators have invested more than £285m in supporting their leased and tenanted publicans, while casual dining has also undergone similar investments and a number of restructurings.

Despite the pain and swathe of restructurings, closures, company voluntary agreements (CVAs) and administrations, some operators (those who could!) have taken the chance reinvest in the existing businesses and to grow their estates. The remarkable resilience shown by owners, operators and investors means that most leisure businesses have navigated through Covid-19, are now emerging as much leaner businesses with stronger foundations.

Just like a phoenix rising from the ashes, operators are seizing the opportunity in challenging times and have decided to grow their business by acquiring new sites on more realistic rents and lease terms. The Restaurant Group, the owner of the Frankie & Benny’s and Wagamama chains, is raising  planning to raise £175m and intends to use the proceeds from the cash call to, amongst other things, expand its Wagamama chain and its Brunning & Price pubs business. The Gym Group plans to open three new gyms in April and one in May, and begin construction on another four gyms. JD Wetherspoon is to invest £145m into developing new pubs and upgrading existing ones.

Smaller players, and newer operators, like Bone Daddy, Pizza Pilgrims, Honest Burgers or Five Guys are also opening new sites. Whilst there is optimism across the industry, emphasised by the phased reopening, the challenge of the pandemic is still not fully overcome, but well-run, well-capitalised businesses have a great opportunity ahead of them.

It will take time for businesses to recover, but there is now a light at the end of the tunnel, and an opportunity to start rebuilding. Pubs and restaurants have been taken for granted before the pandemic, despite the fact they are at the heart of our communities. Needless to say that the pandemic has been very difficult for the leisure sectors it is likely that we will start seeing a big change across the industry.  We have forgotten what is was like to be able to socialise with friends and families in a restaurant or a pub.  In a similar way than we have seen the online evolution taking the retail industry by storm, the leisure industry will have to evolve to survive the new environment that we live in, particularly as technology has played a significant role in the fortunes of businesses in the sector. What will the future look like for the industry? Who knows. The focus is on operational recovery.