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Highlights
- The recent surge in coronavirus cases has adversely impacted the pubs, bars, and restaurants business.
- December is the key month for the hospitality sector, generating nearly three months’ worth of business.
The United Kingdom reported 1,28,685 new cases of coronavirus on 28 December 2021, a record surge in new cases amid a new Omicron strain dominating the country. The daily new patients crossed the 100,000 thresholds for the first time during the week.
The recent rise in coronavirus cases has been adversely impacting the hospitality industry, especially the pubs, bars, and restaurants. As per new data by industry body UKHospitality, the business earnings were down by 60% compared to 2019 pre-pandemic levels, leading to an average loss of £10,335 in the week ahead of Christmas.
The average loss suffered by the industry was above the maximum one-off grant of £6,000 per premises provided by the UK government in its recently announced £1 billion funds for businesses in the hospitality and leisure sectors.
December is the key month for the hospitality sector, generating nearly three months’ worth of business. However, the rise of the Omicron variant has kept most people inside the home, leading to the cancellation of the pre-Christmas celebration. Moreover, many businesses were anticipating higher sales during the festival season as the overall industry’s sales were recovering gradually in the weeks before the emergence of the Omicron variant in mid-November.
Industry body UKHospitality has urged the UK government for additional support for the sector and keep the restrictions to a minimum. Also, the industry body has appealed to the government to not increase the VAT rates from April 2022 to help the industry recovery and promote business growth. The VAT rates for the hospitality sector will be back to 20% from the current rate of 12.5% as per the UK government announcement.
Let us explore a few FTSE listed hospitality stocks that have been impacted by the surge in Corona cases in the country:
Mitchells & Butlers Plc (LON: MAB)
FTSE 250 listed company operates pubs, bars, and restaurants under various brand names. It manages over 1,700 pubs and bars in the UK and Germany. The ease in the Covid-19 restrictions in the second half of 2021 helped the company’s business to recover. For the 52 weeks ended 25 September 2021, the company reported total revenue of £1,065 million, with an operating profit of £81 million. However, the business reported a loss before tax of £42 million, while the net debt stands at £1,270 million.
Mitchells & Butlers Plc’s last close price was at GBX 247.80 with a market cap of £1,471 million as of 29 December 2021.
Restaurant Group Plc (LON: RTN)
The company owns and operates restaurants and pubs in the United Kingdom. It offers various hospitality services through a range of more than 650 pubs and restaurants. The company reported sales improvement across its different divisions during the second half of 2021. As a result, the company’s management has anticipated a full-year adjusted EBITDA in the range of £73m-£79m. However, the recent rise in Omicron variant cases might overturn the management expectation.
Restaurant Group Plc’s last close price was at GBX 92.90 with a market cap of £722.9 million as of 29 December 2021.
