Summary

• Some of the United Kingdom's biggest companies have been forced to cut thousands of jobs due to the Covid-19 pandemic
• Pret a Manger has announced that it will be cutting 2,900 jobs because of the markets remaining abandoned due to the coronavirus pandemic resulting in a decline in the sales of the eatery
• Wahaca, a Mexican restaurant chain has decided to shut down more than one third of its outlets after its business suffered from the pandemic

The coronavirus pandemic has battered the UK economy since its emergence, and no sector has remained unscathed, with millions of job cuts planned due to the devastating impact. At the same time, the government's furlough scheme has allowed millions of people to keep getting a paycheck since March 2020. However, fears are growing that when this scheme is phased out in October 2020, many will have no job to return to. With no clear outlook for the future of the businesses, many of the UK's biggest companies have been forced to cut thousands of jobs.

The novel coronavirus pandemic’s impact on restaurants will be multifarious, but the most immediate consequences are restaurant closures, and with them, mounting restaurant job losses. According to research by the Centre for Retail Research (CRR), a research firm specialising in the retail and services sector, a total of 235,704 job losses are expected for the retail sector during the year 2020, with the total number of store closures to reach a value of 20,620 during the year.

Most of the sector’s job losses are taking place in casual dining chains, whose reliance on high footfall areas like shopping centres, leisure complexes, city high streets, and business models saddled with huge amounts of private equity debt have been shattered by the Covid-19 crisis. These chains are restructuring, closing restaurants, and struggling with high debts, thus putting people out of work in order to survive; independent stores are often left with the choice between staying open for as long as possible, or closing. Therefore, it is expected that more losses will occur during the course of the pandemic, due to a lack of any meaningful intervention from the government, which is slowly pushing more and more restaurants over the edge.

Pret a Manger has announced that it will be cutting 2,900 jobs because of the high streets remaining vacant due to the coronavirus pandemic resulting in a sharp fall in the sales for the eatery. Remote working has been a major concern which has been impacting its sales. The month of July 2020 saw the group reopening 367 of its 410 shops in the United Kingdom, but sales have been 60 per cent lower than last year. This has caused the company to expand its programme of cuts that was previously expected to affect 1,000 people, with 30 branches set to close.

The pandemic has forced Britons to stay indoors and work from home. Hence, this shift in the working patterns of the people has resulted in severely hampering the business of the food outlets that were dependent on hungry office workers and commuters. SSP, which owns Cafè Ritazza and Upper Crust, announced that it would be cutting 5,000 jobs in July because of dwindling passenger numbers, while the high street cafe Le Pain Quotidien removed 200 staff after it was bought out of administration. During early August, Pizza Express had also planned to close 67 of its restaurants permanently, risking 1,100 jobs. Recently, Yo! Sushi announced closing of 19 restaurants, and cutting 250 staffs as part of a company-wide restructure.

To know more, do read: Job Cuts in the Retail Sector of the United Kingdom

The restaurant chain is the latest to join the long line of businesses to cut jobs in response to lower urban footfall. According to the research by the Centre for Cities, only 17 per cent of staffs had resumed the work from their workplace by early August. As per the global advertising giant WPP, around 97 per cent of its 10,000 UK staff are regularly working out of the homes.

The Labour party has requested Boris Johnson to come up with an urgent plan in order to save city centres after Pret announced cutting of jobs and adding to the pile of job losses. The company has been taking part in the government's 'eat out to help out' scheme.

What is the Eat Out to Help Out Scheme All About?

In order to improve the economic conditions of the restaurant businesses, and encourage people to go out, the British Government rolled out this scheme. Customers visiting the registered restaurants under the "Eat Out to Help Out Scheme" are liable to claim a 50 per cent discount from 3 August 2020 to 31 August 2020 on food or non-alcoholic drinks (up to a maximum of £10 discount per diner) on every Monday, Tuesday and Wednesday.

The discount will automatically be available to the customers at participating establishments (restaurants, cafés, bars or pubs, work or school canteens, and food halls). Establishments can then claim reimbursement from the UK government for the discount they have given to their customers.

Will the Scheme Renew?

The Government has not yet given any indications regarding the extension of the "Eat Out to Help Out" scheme. Rishi Sunak, the chancellor of the UK Treasury, extended his gratitude towards the Britons for coming out in solidarity to support the ailing the hospitality industry, and helping sustain the jobs of thousands of people working in it. However, this scheme is proposed to come to an end on 31 August 2020.

To know more, do read: The "Eat Out to Help Out" May Not Get an Extension, Hospitality to Rely on Early Vaccine Development

In line with Pret a Manger, Wahaca, a Mexican restaurant chain has also decided to shut down more than one third of its outlets after its business suffered from the lockdown restrictions due to the coronavirus pandemic. Founders of Wahaca said that they were trying their best to save jobs wherever possible, in an email sent to the restaurant staff. Ten of the firm's twenty-eight sites will be closing down operations.

The group was founded by former Masterchef winner Thomasina Miers and Mark Selby in 2007. On 26 August 2020, the spokesperson of the Group said that four of its London branches, as well as outlets in Bristol, Liverpool, and Manchester, have been targeted for closure, stating the reason that the chain was finding it tough to pay its rent bills at in its city centre locations since it has run out of its cash reserves over the past four months.

Wahaca is considering a Company Voluntary Arrangement (CVA) re-structuring deal in order to facilitate its cost-saving plans.

To summarise, the coronavirus pandemic has turned into a global crisis, evolving at a high speed and scale. None of the industries has been immune to this crisis, including the British hospitality sector. Though the British Government has taken steps to save the hospitality sector from crashing by introducing Eat Out to Help Out scheme, however, there are still a large number of restaurants that are making losses as people are still fearful of going out and celebrating. The work from home arrangement has also dropped sales, which has made eating chains like Pret a Manger and Wahaca lay off many of their employees.