Published: 11:50, 21 April 2021
| Updated: 11:53, 21 April 2021
Pub chain giant and brewer Shepherd Neame says it hopes to be back in profit by 2022 after the impact of the Covid lockdowns blew a huge hole in its bank balance.
For the six months ending December 26, 2020, the Faversham-based firm reported a statutory loss of £7.2million before tax. A year earlier, the same period had generated a profit of £5.4m.
But chief executive Jonathan Neame says he hopes a staycation summer and the "outbursting of joy" as pubs reopened their pub gardens earlier this month will help dig the company back into the black.
He also hopes that by mid-summer the firm will be able to start recruiting staff once again.
The company started with 1,750 staff but was forced to release 10% of them last autumn, with a further 10% leaving of their own accord during the hugely disruptive period.
He explained: "I think the worse period for us, without question, was the autumn with the constant chopping and changing. That was really debilitating for everybody but I have no complaints with the government's roadmap out of lockdown.
"You could argue it could be quicker, but, to be honest, if we're just building up that confidence with the consumer I'm happy with that.
"What we just mustn't do is go backwards again. That would be awful.
"We have to be cognisant of what's going on in the rest of the world, but so far, so good.
"Schools opened and so far all the evidence suggests that change has been absorbed and I hope this particular change will be absorbed too."
Pubs reopened for food and drink outside on April 12 - inside hospitality is set to reopen on May 17.
Currently 200 Shepherd Neame pubs are open - with the remainder, including its central London outlets which have been closed since the first lockdown - will be up and running again next month.
And Mr Neame says the response to this month's reopening was hugely positive.
He explained: "It has been momentous and it's been very enjoyable; a real outbursting of joy. Employees are thrilled to be back working and customers are thrilled to be able to socialise with friends and family. There's a real sense of the page being turned.
"There's a noticeable difference to when we reopened in July when I think people were very apprehensive about coming out again, apprehensive about how they should behave and operate in a pub environment.
"This time it feels a bit more familiar and the pick-up in footfall is more immediate than last time. It was a slow build through July but this time it seems as if there's real pent up demand to come out again."
While its pub portfolio was closed due to the government-imposed lockdowns, the firm was buoyed by a 25.7% boom in sales of its bottled beers.
But he admitted the impacts of the last year will take time to adjust to.
The CEO explained: "Everyone's goal posts have shifted in the last year, so it's all about debt and cash management rather than profit per se.
"From a cash point of view, our cash burn has been slightly lower than expected at £1.5-2m a month and that's partly because our brewery has done very well during the period with sales to export and grocery. And partly because there was another round of grants which has helped us in the early part of this year.
"From a debt point of view, our overall indebtedness is similar to where we were at the end of the last period. So last time had a lot of deferred liabilities and we've paid most of those off now. The banks have supported us - and that's critical - which means we have ample liquidity as a business through to September 2022 and I think that time period is long enough to recover and return to profitability. That's assuming we don't go backwards again.
"But if we get the staycation summer that we hope, and the forward bookings for our hotels are very strong at the moment, then over that time period I think we can return to profit.
"Maybe not the levels we were at before, but by the end of 2023, I would hope we would have recovered all the ground that we have lost and some more.
"For most businesses this will have created a three-year hole; set back severely for one year, stabilise for one year - we're entering that period now - and then grow back to where we were."
And he believes the closure of pubs have made people re-evaluate their importance to their community.
He adds: "Let's be clear, a pub is about socialising. What people miss is socialising face-to-face.
"The first lockdown was all about the wonders of technology and Zoom; the others all about their limitations.
"The fact is human interaction face-to-face is so much more rich and rewarding than the more functional aspects video conferencing can give. That's what people really miss.
"People often paint pubs as places where you go just for alcohol or there's bad behaviour. None of that is true. It is a place of gentle laughter and relaxed socialising.
"That has definitely put the pub back at the heart of those communities."
And for those who have enjoyed table service, the good news is that it could be here to stay.
"I think from a pub operational point of view," says the Shepherd Neame boss, "table service is something customers really like and while it may not be mandatory in the future, I'm sure many outlets may continue with it, particularly those that do a lot of food. And that has increased the quality of experience for many customers.
The pub is a place of gentle laughter and relaxed socialising.
"Many others, of course, miss bar service.
"If I had a message to those unsure about venturing out, I'd say it's safe to come back. We're not forcing anyone to - we want people to come back in their own time. But those who have come back have found a new level of joy and happiness they have been missing in their lives for most of the last year.
"We are ready, willing and able to welcome people back and hopefully they will all feel the confidence to do so in due course."