Exclusive: At Least Half of Pubs Will Never Reopen After COVID-19, U.K. Hospitality Union Says

The U.K. hospitality industry is worth about £100 billion ($127.7 billion) to the British economy or, more accurately, it was before COVID-19 hit. Pubs shut, restaurants closed and nightclubs were banned from opening as lockdown restrictions took hold.

Now, an industry that employs around 10 percent of the total British workforce is in crisis, with literally millions of low-paid workers unsure if they still have a job, if the company they work for will still exist or if their place of work will remain boarded up forever.

So what do Britain's pubs, restaurants, nightclubs and leisure companies do now? When will pubs reopen? When can people start going to their favorite restaurants again? And what happens to over two million people working in hospitality?

"It's gonna be just catastrophic, f***ing catastrophic," Jonathan Downey, food and drinks entrepreneur and founder of the Hospitality Union, tells Newsweek.

"Around 12 years ago [in the global financial crash of 2008], I used to go to the cashpoint and take 20 quid out. I had bars all over the world—five different countries—but that £20 note, I had to live on that for a week. That's what a lot of people are doing now. It doesn't bear thinking about.

"In the last 20 years, 10,000 pubs and clubs have closed in the U.K. In the next 20 weeks, 10,000 more could shut forever [without huge changes]."

The schedule for reopening bars and restaurants is different depending on the country within the U.K. In Scotland and Wales, no firm date has been given, July 20 is the date in Northern Ireland and in England, it gets even more complicated.

Pub gardens in England were reported to be able to reopen as early as June 22, despite current government guidelines not allowing it until July 4.

"We want to reopen hospitality as quickly as we can," Prime Minister Boris Johnson said at Prime Minister's Questions.

"That is still the plan [to reopen from July 4 and not earlier]. Guidance is still being developed for then."

Johnson had previously heavily hinted that he was working on a plan to make sure pubs were able to open more quickly and he was going "as fast as we can" to make sure everything could reopen.

"It's not even in question that 50 percent of pubs, clubs, bars and restaurants won't reopen again," Downey says.

"We might even be underestimating there. That's two million jobs gone. My business [street food market Street Feast] has got no hope of reopening anytime this year, I don't think so.

"Think about nightclubs, music venues, your night-time economy, real social life, not just eating and drinking, not just a couple of pints outside a pub or a bite at a decent restaurant. The proper night-time economy is absolutely f***ed.

"I don't see any way around that apart from with a vaccine. The [profit] margins are so slim, businesses are no longer viable," Downey says.

Some have already folded. Iconic LGBTQ+ venue Balans on Old Compton Street in Soho is being sold off in an auction alongside its other six venues

Other venues have been trying various things to make ends meet.

Fast-food restaurant chain LEON has been running a "Feed Britain" campaign, for example, where food boxes can be ordered for delivery, and other restaurants are relying on delivery services Deliveroo or Uber Eats.

Many restaurants and bars have been running a drink takeaway service where you can order from someone at a serving hatch then sit nearby to enjoy your drink.

"I was at a vineyard the other day and they have an outside seating area. I could buy a glass but the seating area was all taped up so everyone was sat on the grass next to them," James Halliwell, editor of U.K. hospitality news and research specialist MCA, tells Newsweek.

"It felt perverse that we were allowed to sit on the grass but the tables were out of bounds. It's very confusing. You can go to the supermarket, to the garden center, to Ikea, but you can't go sit in a pub garden, even if someone is serving you a safe distance pint outside. It's also clear people aren't paying as much attention to the rules as they once did."

It is this "mockdown", where some things are allowed but others are not, which is making businesses panic and potential customers confused.

Big pub and restaurant chain stock values have fallen by around half since before COVID-19 began.

In England, there have been no clear answers about whether social distancing guidelines of remaining two meters apart will remain or, as campaigners propose, it is reduced to one meter to allow more customers on to the premises.

Scottish brewer and pub company BrewDog believes its venues could reach up to 75 percent of usual capacity with a one-meter rule but would fall to 40 percent with the current two-meter guidelines.

This has made it very difficult for businesses to plan the changes needed to reopen.

Large pub chain Wetherspoon, for example, has spent a reported £11 million on perspex screens between bar staff and customers, extra staff for cleaning and altering venues to make them compliant with current guidelines, which may or not still be necessary when pubs are allowed to reopen.

If that date of reopening does end up being June 22, other venue owners will have 12 days or fewer to get ready if they intend to open on the first day they might be allowed to.

But that doesn't answer the question of whether customers will come back.

Around three-quarters of people are worried or very worried about going back to pubs and restaurants because of the COVID-19 risk, an MCA study found in early May.

"Little country pubs, because of the social distancing rules, might only be allowed two people in there," Halliwell says.

"Hospitality is friendly, meeting friends and having a laugh, hugging people, kissing people and having fun.

"Hospitality has spent years cultivating environments that allow that and reflect it. The idea that they're being asked to create sterile environments, it's the opposite of what they've been trying to achieve over the years. It goes against the very spirit of going out to have fun."

The government, as Newsweek has already reported, has to find an impossible balance between a furlough scheme, with the government paying most of an employee's wages to avoid redundancies, and being able to balance the economy, with the cost of propping up businesses unable to trade becoming prohibitively high, according to their own forecasts.

The government has given £10 billion in aid, according to the Department of Business, Energy and Innovation Strategy (BEIS) as of May 26, to 800,000 businesses with the Small Business Grants Fund scheme and the Retail, Hospitality and Leisure Business Grants Fund scheme.

But this furlough scheme is changing, with employers expected to contribute to employee wages from August 1, increasing until October then, at the end of that month, the scheme will end, meaning employers have to pay all the wages themselves.

"41 percent of hospitality operators told us that unless they're operating at full capacity by August, they won't be able to contribute a penny," Halliwell says.

"The timescale seems problematic. The idea that everyone will be up and running by October seems unlikely. Inevitably, mass redundancies will follow. As to how many people? It feels arbitrary to say one million, two million or whichever other number because we simply don't know.

"Many operators have said it'll cost them more to reopen under these conditions, so many will remain closed. Because they don't know what those conditions will be, they can't start to plan properly."

This has led to campaigners, like Downey, demanding more help for those working in the hospitality industry.

"We'll see our employees through right to the end as far as we can," he tells Newsweek.

"Although there is a safety net [with Universal Credit and unemployment benefit], whether or not it's enough of a safety net is something else. It's really a political thing that I try not to get too involved… but £94 a week? Seems like nothing.

"And we get called about delayed payments from HMRC and they [the employees] all say, look, I've got four pounds left to live on. What can you do? We have an emergency payout for these people.

"But it's just ridiculous what's expected in a city like London. The cost of living is so high."

Downey has formed the Hospitality Union and is lobbying the government for a National Time Out, a 12-month rent holiday for those in the hospitality sector, where no rent is paid for as long as a venue remains closed.

"Nobody in this country running hospitality premises should be paying rent if you've been closed for four months because of government action," Downey says.

It also comes with calls for the furlough scheme to remain for those in the hospitality industry as it remains unlikely that all venues will be open by October 31.

"[The] one mistake is this, to make it [the furlough scheme] one size fits all," Labour's shadow energy secretary Ed Miliband told BBC Today programme.

"If you take certain sectors like hospitality, the arts and the theatre sector, tourism, those sectors are going to take longer to reopen.

"The Chancellor [Rishi Sunak] has said in relation to the furlough... we're just going to have one approach. Whether it's through the furlough or a different mode of support, we face an emergency in those sectors... We've got to make sure those businesses and those workers don't go under."

This has led to less than optimistic predictions from industry experts:

"In reality, they can't even open at the moment. When they do reopen, it's going to be under such restrictive conditions, it will make it economically unviable to do so," Halliwell says.

"Unless there are big changes, the picture is very bleak. Being hopeful is not concrete enough. When we do know all these guidelines, then you'll have the number of people who can or can't reopen profitably. We're playing a waiting game at the moment."

One of the major difficulties for the hospitality industry was that COVID-19 came at a time when it was already struggling.

Late-night drinking licenses, which allow venues to remain open after 11 p.m., have been difficult to obtain for business owners and more people are finding alternative entertainment or choosing to drink or eat at home.

"Businesses on the high street were already under huge pressure before this," Halliwell says.

"Whether it was Deliveroo stopping people going to restaurants, too much competition or high business rates, the pressure was huge and now this has come along.

"Those pressures haven't gone away. If this whole COVID-19 thing hadn't happened, it would still be an industry under pressure.

"The first of November is going to be a huge day of reckoning for the hospitality industry. I don't see it being anywhere near where it needs to be to avoid mass redundancies."

Unlike other countries, it is unlikely for late licenses to be granted on non-weekend evenings. In Soho in Central London, for example, with one club claiming it had the only 6 a.m. licence in the area.

"It's not like New York where you can go out until 4 a.m. every night of the week," Downey says.

"Unless you're a member of Shoreditch House, you don't get a late drink anywhere. The night-time economy was already struggling. This is not quite a death blow but it's really damaging."

We wanted to speak to a minister about what the government was planning to make sure the hospitality industry could flourish after COVID-19.

No minister or secretary of state was available to talk to Newsweek about the re-opening of pubs, restaurants or help for the hospitality industry after repeated requests over two weeks.

A Department for Business, Energy and Industrial Strategy spokesperson said: "Our pubs and restaurants taskforce is working at pace to develop COVID secure guidelines to enable pubs, restaurants, bars and cafes to reopen at the earliest opportunity it is safe to do so. Many can already offer delivery services and will soon be able to offer outdoor services, whilst maintaining social distancing.

"In the meantime, businesses can continue to access the government's substantial package of support, including billions in grants, a business rates holiday, tax deferrals and a ban on the eviction of commercial tenants that are unable to pay rent because of coronavirus."

Newsweek would, of course, welcome an interview at any later date.

Additional reporting by Basit Mahmood.

UPDATE 07:25 EDT, 6/10/20: This piece has been updated after publication to include comments from Prime Minister Boris Johnson made at Prime Minister's Questions at 07:20 EDT on Wednesday, June 10