UK Markets closed

Barely back on their feet, UK small businesses face crushing new lockdown

Ben Makori and Natalie Thomas
·3-min read

By Ben Makori and Natalie Thomas

LONDON (Reuters) - Business has been tough for Mandy Yin, chef and owner of a Malaysian restaurant and takeaway in London, since she tentatively reopened in June after being forced to shut down for two months during Britain's first national coronavirus lockdown.

Yin has just about managed to keep her eateries afloat, simplifying menus to make them easier to execute with a smaller staff, branching out into selling deli items, negotiating a 50% rent reduction, but it has been a titanic struggle.

"On average, takings are very low," Yin said. "I see about 100, 200 pounds maximum a day, which is not enough. It's not sustainable. But I'm trying to just keep going to keep my staff employed."

Now, with COVID-19 infections once again rising at an alarming rate, comes a new hammer blow: a second national lockdown, starting on Thursday, in which cafes and restaurants must close except to offer takeaway food.

Even before the latest measures, hospitality was one of the hardest-hit sectors in an economy that shrank a record 20% during the last lockdown, and has been slow to recover.

Last month two thirds of businesses in the sector reported sales were still lower than a year earlier, versus under half in the broader economy.

Hospitality workers have also been some of the most likely to lose their jobs.

In theory, Yin can keep going with her takeaway business, but she fears in practice footfall will tail off even further as non-essential shops shut down and people are urged to stay at home as much as possible. Business survival looks uncertain.

"I'm not going to close. I'm just going to keep going and hope that there will be enough custom," she said.

Yin has modified her business model, increasing her presence online where she offers meal kits that can be home delivered nationwide by courier.

"It's something," she said. "I'm going to take as many little income streams as possible and hope for the best."

Michael Hewson, chief market analyst at online trading firm CMC Markets, said the survival of many small businesses like Yin's would depend in large part on government action.

"It's the small businesses, the high street businesses, it’s the one-man bands that are most at risk from this second lockdown," he said.

"That is why it's vitally important that the government supports these businesses so that they are still there when we come out of this."

The government already reduced business taxes, introduced a furlough scheme for staff and offered low-interest loans and grants for establishments forced to close.

One of the most devastating aspects of the pandemic has been the damage done to businesses that were not only viable but thriving.

Before COVID-19, Yin's Sambal Shiok restaurant was garnering rave reviews in national newspapers and bustling with an enthusiastic clientele - so much so that Yin was keen to expand, opening her takeaway outlet, Nasi, in March.

She took out a large loan to get Nasi up and running, only for it to close just four days after it started trading. The debt has compounded her difficulties.

Whether or not she pulls through, Yin fears that many will not, draining life out of once vibrant neighbourhoods.

"I think our high streets will be empty come January, because not many have enough cash reserves to outlast the constant lockdowns and constant uncertainty of the next few months," she said.

(Additional reporting by David Milliken, writing by Estelle Shirbon)