Oakman Inns CEO Peter Borg-Neal: Happy with 4 July reopening

Peter Borg-Neal has told MCA he was “happy” with the way his estate traded over the 4 July reopening weekend.

Speaking to MCA’s virtual event The Conversation, the Oakman Inns CEO said “on balance the weekend went well.

“We traded around 83% of last year on a like for like basis on Saturday, and about 82% on the Sunday. We’re quite happy with that number given that we were at 75% capacity in terms of the number of seats and we had no vertical drinking except for in the garden.

“We were full in terms of the dining capacity that we could take over all the peak hours over the weekend. The key limitation over the weekend was having less seats to put people in.

“But we were able to get our basic food operation going pretty well. However, even with sales at 82% of normal, our labour costs were higher than normal because of the complexity, so we don’t feel great about what profitability will be.

“We think a bunch of the pubs will make some money, some will break even, some won’t, but we do think it’s worth doing. It’s not just labour cost, I suspect that food costs will be higher, the supply chain is quite complex.”

He said that as Saturday evening wore on, outside spaces became “a bit of an issue” as “towards the end of the evening you did see groups of youngsters gathering in the gardens who didn’t want to obey social distancing.

“We were trying to be advisory on it, rather than prescriptive, but it’s a bit of an issue. We just stopped people coming in because it was clear that the youngsters just wanted to see friends, to bump into people, they wanted to go and talk to people they’ve not met before.”

Although those particular younger pub goers were unconcerned, Borg-Neal is concerned about customer confidence in general, saying he’s “very watchful, and maybe a little bit nervous what’s going to happen, because I think, if anything, customers were more cautious than I thought they would be.

“The other strange thing was that we had some cancellations that seemed to come after we saw the images on TV from Soho, which was irritating, because actually in the real world out there it was very peaceful. And I would suggest it was much calmer and safer than the previous weekend where people were running around parks and riverbanks.”

One of the more contentious issues around the safety guidelines is the request to take customer’s details so the resulting data can help support the government’s Track and Trace scheme.

Borg-Neal says “we’ve complied with it. There is a slight sense of comedy about the whole thing, we don’t have a properly working track and trace system in the country after all this time, but now we’re doing it via pubs but we didn’t do it via supermarkets… it’s kind of an irritation, but we’re crystal clear, if the customer doesn’t want to give their details to us that’s fine, they can come in and enjoy their evening.

“But we are asking everybody, and for 85% to 90% of the people that came in we had a booking from them, so we had that information already. And for the very few walk-ins we had, we did ask them, and pretty much everybody gave us the information.”

Borg-Neal was an outspoken proponent of reopening on the 4 July, insisting he would do so regardless of the government’s stance, but says he was simply being “completely honest about the whole thing. It was never meant to be any kind of rebellion, we just knew it required three weeks to get ready.

“Unless we announced we were opening, my team wouldn’t commit properly, they would wait until they knew for sure. So by saying ‘We are opening on that date regardless’ it galvanised everyone. And we opened in a manner that looked professional, we prepared, we had thought about everything, all the risk assessments had been done, the team had been retrained, the comms had gone out to customers.”

Fortunately everyone got the go ahead anyway, but that debate is history now and ongoing support from the government is back at the top of the agenda, with chancellor Rishi Sunak expected to announce a package of support on Wednesday that is likely to include a VAT cut on food and drink served in restaurants and pubs.

Another possibility is some kind of voucher scheme to encourage people back out, but Borg-Neal doesn’t think that’s a good idea, saying “you’d be open to all sorts of secondary markets, it’ll be confusing and weird and I very much hope the government aren’t thinking realistically about that.

“I think a VAT cut for our industry, which they have delivered in Germany very successfully, would be a great idea. And in the medium to long term, getting food down to the same zero rate of VAT as processed food from a supermarket, would also be great.

“VAT is my favoured intervention because I think we need some of it to support margin and some of it to encourage volume. Clearly anything on rent would be welcomed but my gut feel is that the government will find it very hard to do anything, they will rely on people doing deals.”

As for the immediate future for his business, he’s confident that Oakman had prepared as thoroughly as it could for the tough months ahead and he also has plans to strengthen its balance sheet further.

“We did a lot of work in the early part of the closure period, an equity fund raiser, and we did acquire a CBIL, but the latter was conditional on achieving the former, so it was all hard work.

“But we have shored up our balance sheet, and we will probably look to take more action. We’ll look to raise some equity, we haven’t figured out yet whether that might be to accept a large strategic stake from someone external or whether we’ll do a retail fundraiser, which is what we’ve normally done in the past. Directionally you want to have a strong balance sheet and you want to be ready for the future. In the short term my mind will be about building revenues in the business.

Ultimately he thinks there will be a “gradual return to normality, and we hope that the government doesn’t feel the need to intervene. I’m hoping that come September, with schools reopening, that’s a point where they’ll want to try and free things up again.

“All things being equal, with consumers getting gradually more confident from a health perspective and with revenues gradually rebuilding, the next question will be ‘Where is the economy at, and are people still going out, are they still spending?’ That’s going to be the tough one.

“I think people need to understand that this lockdown will have hit the economy very, very hard indeed.”