London’s pubs and restaurants are not out of the woods yet

Even with many people still working from home, long lunches in the City of London are back in fashion. Fortunately for diners and businesses alike, new changes marked the next step in reopening England, allowing eating and drinking indoors. And as the rain fell on a recent Monday, some restaurants on the Square Mile may once again offer indoor shelter.

But business at the city’s restaurants still remains a shadow of pre-pandemic levels. And with concerns about the spread of the Indian variant across Britain, the danger is that it will be as good as it gets for the hospitality industry.

The next phase of the country’s reopening begins on June 21 when all legal restrictions on social contact must end, perhaps even the need to stay at least three feet away from other people. If that date were pushed back, it would be another blow to besieged pubs and restaurants, many of which are operating below capacity due to social distancing rules.

The resumption of indoor rallies is always an important step in the recovery of England. Theaters, cinemas and museums have finally been able to reopen their doors. Group yoga and dance classes can take place in gymnasiums. Drinking and eating indoors can replace a pint outside in cold weather.

In the first phase of unlocking, as of April 12, only a third of UK pubs, bars and restaurants were in business, according to hotel data provider CGA and consultants Alix Partners. Pubs benefited the most, as they were more likely to have an outdoor space where groups could meet.

Being able to eat inside will make a much bigger difference to restaurants. Besides cafes and in-store cafes, they are now expected to get a larger share of customer spending. Restaurants can also benefit Britons’ vacations close to home, as hotels are once again accepting leisure travelers and international travel options remain limited. (There are only a handful of countries on the UK’s “green list” that allow Britons to travel without quarantine upon return.)

But the hotel industry is still far from returning to normal. Rules such as staying at least three feet away from anyone outside your household limit the number of people a pub or restaurant can serve at any one time. Parties of more than six people are still prohibited. Operation below maximum capacity will continue to weigh on sales and profits. Even with indoor options, its members believe sales will be just over half of those achieved in May 2019, according to UKHospitality, the industry’s trade body.

So the easing of all restrictions on June 21, as envisioned by Prime Minister Boris Johnson’s roadmap to get out of containment, is crucial. The big worry now is whether the Indian variant will make a difference. As my colleague Thérèse Raphaël noted, there are reasons to hope that the country can avoid a third wave of COVID-19. More than two-thirds of the population have received a first dose of the vaccine and testing is faster.

Business Secretary Kwasi Kwarteng recently told Sky News that it was still “very likely” that all limits would be lifted next month, but he urged Britons to remain “measured and cautious”. A review of the social distancing needed for the June 21 benchmark could be delayed.

Uncertainty will weigh on already overwhelmed companies. With just over a month to go, pubs and restaurants need to start preparing now. This means bringing back leave staff and in some cases recruiting more workers, as service workers may have changed jobs or returned to Europe. The problem is particularly serious in London, where restaurants report staff shortages.

The resurgence of COVID-19 cases in parts of the UK may also shake people’s confidence in their exits. So far, consumer spending has been strong. Pent-up demand has been unleashed for everything from fashion to summer vacation. If the roadmap for reopening hits a problem, it will not only be the hospitality sector that suffers, but the entire consumer economy.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries.

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