When entering 2020 we were fully expecting the year to largely be focussed on two topics: sustainability and growth funding. To a large extent, both topics have still been highly prevalent, albeit funding often being required to strengthen cash flows rather than to pursue ambitious growth.
As you can see from our timeline above, the impact of COVID-19 is one which is still, unfortunately, ever present. The initial fundamental consequence of lockdown restrictions resulted in the temporary closure of many businesses operating in the sector. It’s been one of the hardest hit sectors in terms of ongoing restrictions and this has understandably resulted in businesses openly voicing their concerns and struggles. However, and thankfully for many, the pandemic has presented new opportunities and forced businesses to adapt.
How businesses have faired
Companies with an exclusive or predominantly online business model have been in a strong position to cope with lockdown restrictions. On the other end of the spectrum there is the hospitality industry, and suppliers who predominantly sell to hospitality, who despite having displayed incredible resilience and adaptability, have likely experienced one of their most turbulent years in business.
An interesting anomaly is of course companies who have experienced both the highs and lows simultaneously, for example being negatively impacted by the closure of taprooms, but also delivering strong growth in their online and retail sales channels, as consumer behaviours are forced to change.
The impacts of COVID-19
As a firm, we have had many conversations with our clients about the impacts of COVID-19. While the pandemic has undoubtedly proven to be a challenging time for the majority, there is a certain comforting prospect that cannot be denied and that is the reaction of the public; community spirit has shined very brightly on otherwise dark times.
In a recent questionnaire to consumers which we issued across our networks, 96% of respondents said that the current strain on the sector had motivated them to shop both locally and from small businesses.
A standout conversation a member of our team had with a local restaurant owner touched on this point. They discussed how they received many messages of concern at the start of lockdown, with customers asking what they could do to help. When restrictions eased, between restaurant covers and their impromptu delivery service, they experienced one of their busiest Septembers to date.
In our survey mentioned above, we questioned consumers to gather if COVID-19 will impact their long-term shopping habits. 92% said that March to August they supported small business more than they had ever done before, and 100% claimed that as restrictions ease, they will continue to support small food and drink businesses.
However, everyone has been exposed to the benefits to their local economy and the environment when shopping local, and still small businesses have struggled to compete with the ease supermarkets bring to consumers’ busy lives.
So what can businesses do to grow their customer base?
When asked what would encourage them to support their local businesses more regularly, the most popular answers were through delivery services and click and collect options.
This is another common trend in our conversations with clients. The pandemic has encouraged them to either take the plunge into the digital world or improve their existing presence; a task that has typically been pushed to the bottom of the to-do list. Two businesses shared with us that they’ve maintained a positive outlook to the future as this time encouraged them to enhance their services and improve their processes.
How we've worked with the sector this year
This year, our team have really focussed on saving our clients time, helping them automate their finance function through implementing cloud accounting and our bespoke virtual finance function service. This in turn has helped give businesses a bit more peace of mind, as we manage as much of their finance function that is needed, and it gives them instant insight into their current financial performance.
A huge lifeline to the industry has of course been the furlough scheme. As businesses were forces to close completely, thousands of people were placed on furlough. Our payroll team were on hand to support food & drink businesses, taking the stress of understanding the new legislation away. Across our total client base, our payroll team processed £3.25 million worth of furlough grant money in May alone.
Through managing businesses’ finances and payroll, we have been able to give businesses time to pursue new opportunities such as delivery and e-commerce services, and our advisory team have been on hand with recommendations on how best to implement these.
What is in store in 2021?
It is hard to predict what lies ahead for the food and drink sector. The discovery of a vaccine provides hope that normality will resume in the near future. We look forward to a time where we can socialise with all of our loved ones in hospitality venues operating at full capacity. We also look forward to a time where conversations of success and ambitious growth outweigh conversations of survival.
Until such time, we will continue to help our clients navigate their way through what is left of this unforgettable year and beyond, assisting them in maximising the opportunities that are available to them as the market hopefully begins to improve.
You can find out more about our involvement in the food and drink sector and how we work with food & drink businesses here