Call for ‘11th-hour support’ for small hospitality businesses

The chair of Loungers warns Britain will be facing “economic Armageddon” if small hospitality businesses are not given the support they need to survive.

Alex Reilley co-founded his first café-bar on North Street in 2002, going on to open several more sites in Bristol before embarking on an ambitious national expansion plan that saw the chain become the fastest growing business in the sector before the pandemic.

With an annual turnover of more than £200m and a workforce of some 5,000 employees, Loungers, which has a head office on Baldwin Street, is well-placed to weather the economic storm. But Alex says if the coronavirus outbreak had happened when the company was starting out, he is doubtful it would be here today.

The entrepreneur says while schemes such as furlough and financial grants have been welcomed, they are inevitably biased towards larger businesses that employ more staff.

He is calling for the government to provide “11th-hour support” to the many smaller companies that are balancing on a knife edge to safeguard existing jobs as well as the businesses that contribute so much to the wider economy.

Alex believes scrapping the requirement for smaller employers to pay National Insurance and pension contributions for staff that are on furlough, and issuing refunds for payments made since early November, would make all the difference for firms.

“We are now expected to pay effectively ten per cent of the payroll even with no income,” explains the Loungers boss.

“This is an environment where these businesses don’t have any money left.”

Loungers has opened more than 150 new cafe/bars since the first cafe/bar on North Street – photo courtesy of Loungers

The chancellor has extended the temporary reduction of VAT – from 20 per cent to five per cent – for hospitality and tourism businesses until March 31 2021, but Alex argues the gesture is irrelevant for the many businesses unable to generate any sales.

The Loungers chair is also fearful of the looming deadline for the end of the business eviction ban, which also hits at the end of March, warning it will leave many companies vulnerable to action from landlords. He acknowledges there is no easy solution but says it is an issue that has not been adequately highlighted and could have devastating consequences.

“I fear for the many businesses who could find themselves in a powerless position and potentially be lost as a consequence of something that is completely beyond their control,” Alex tells Bristol24/7.

“This has taken control out of everyone’s hands and I would like to see the government provide 11th-hour support to get them there.”

He continues: “All those jobs that have been protected and all the money the government has put in will be for nothing if the employers are not supported, then there will be no jobs.

“I think they should consider picking up the National Insurance and pensions contributions for smaller businesses because they are the big businesses of the future.

“If the Treasury doesn’t spend more money, it will cost more in the long run because they will have an economic Armageddon on their hands. We will have people losing their jobs and entrepreneurs and risk-takers, who will have lost everything and be completely crushed by the whole experience.”

After opening the Lounge in Southville, Alex, who now lives in Wookey Hole, opened Tinto Lounge on Gloucester Road and Porto Lounge in Fishponds the following year and went on to expand the business rapidly from 2010.

The pandemic has still taken its toll on the chain, with the Banco Lounge on Wells Road one of two Loungers premises to close permanently due to the impact of the restrictions.

Banco Lounge won’t reopen its doors when restrictions are lifted – photo courtesy of Banco Lounge

Alex says launching any business is a leap of faith and he still remembers what it’s like to own a “ten-table café”.

“I know how hard it is to start a business and roll with the punches,” he tells Bristol24/7. “Had this happened 15 years ago, I don’t know if we’d have kept going as a business of that size then.”

In the wake of the pandemic, the focus will be on rebuilding the economy and Alex believes the hospitality sector, which has been so badly impacted by Covid measures, will be at the forefront of creating jobs as well as supporting a wider economy of businesses such as suppliers and taxi firms.

But, he says, the government needs to act now to protect the businesses – and jobs – that already exist in the sector.

Main photo courtesy of Loungers

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