Pub and restaurant stocks have rallied after news emerged over the weekend that Boris Johnson is likely to lift lockdown measures and allow venues to reopen.
Reports suggest that the Prime Minister will announce a return to a modified tier system similar to the one in place before the latest lockdown came into force. That would allow pubs, bars and restaurants to reopen for business within certain guidelines, such as controls over household mixing indoors and providing substantial meals, for example.
There is also speculation that Johnson may extend opening hours from 10pm to 11pm, giving customers an extra hour to finish their meals and drinks.
Pub group share prices rallied on Monday as investors anticipated a long-awaited reopening of pubs, bars and restaurants. The shares of Mitchell and Butlers (MAB), which owns the All Bar One, O'Neills and Harvester chains, initially jumped more than 7% in early trade before falling back a bit to 225.5p.
Extending the closing time will be welcomed by pub groups, particularly after JD Wetherspoon revealed in a trading update that sales in October were ‘significantly lower’ than previous months as a result of the 10pm curfew.
NEW RESTRICTIONS ‘CATASTROPHIC’
However, the market could be getting ahead of itself as leading figures in the hospitality industry called the proposed new restrictions as ‘catastrophic’ for the sector.
Hospitality businesses in Tier 3 will only be allowed to offer takeaways, while those in Tier 2 will only be able to serve alcohol with ‘substantial meals’. Previously, pubs and restaurants in Tier 3 were allowed to stay open if they provided substantial meals.
Kate Nicholls, chief executive of industry body UK Hospitality, said the news was ‘far worse than anyone could’ve anticipated’, adding that had the tiers stayed as they were until March, 94% of businesses in Tier 3 and 74% in Tier 2 to expected to go bust, but ‘now we have restrictions that are even worse.’
She told the Telegraph, ‘We make 25% of our profits in the run-up to Christmas and the Government is taking that away.
‘This will have a catastrophic effect on a large number of businesses and all those jobs that were furloughed will now be lost. You are talking about the prospect of a million job losses and 30 to 40,000 premises closing their doors for good.’