Pubs and restaurants play an important role in society, facilitating social interaction, and are often a focal point of small communities.
It therefore came as a blow to many, not least of all pub and restaurant operators, when the government announced live on television on 20 March 2020 that pubs and restaurants should close that evening, to avoid the spread of COVID-19 (Coronavirus).
On 26 March, The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (“the Regulations”) came into force, including a legal restrictions on the operation of the following businesses:
The Regulations require these businesses to cease selling food or drink for consumption on the premises and to close any premises where such food and drink would usually be consumed. It is an offence to contravene these restrictions without reasonable excuse. The restrictions are to be reviewed at least once every 21 days to determine if they are still required (the first review being due by 16 April 2020) and are due to expire after 6 months.
However, these restrictions do not prevent pubs and restaurants from offering takeaways, although there are a number of considerations to be borne in mind.
Times are tough and it is understandable that many pubs and restaurants are seeking to continue trading to the extent they are able to, during the current pandemic. In order to support the sector, the government has introduced a range of measures, including support with business rates, staff sick pay, and more recently, furloughing. Planning permission rules have also been relaxed to enable pubs and restaurants to sell food for consumption off the premises.
New legislation came into force on 24 March 2020, which introduced new permitted development rights meaning that properties with Class A3, A4 or mixed A3 and A4 use, may now provide takeaway food at any time until 23 March 2021. Ordinarily, a business would have needed to apply for a change of use, which would invariably take some time to process. This is therefore a welcome change which will avoid the need to make such an application – although businesses are still expected to notify local authorities when they start or stop providing takeaway services.
However, the situation is continuously evolving so business operators should keep a close eye on future developments because this may change again if further lockdown restrictions come into force in due course.
If you are providing, or planning to provide, food takeaways, you should consider the following:
- The ability to provide takeaway food does not extend to the right to sell alcohol as part of a takeaway service. The right to sell alcohol is governed separately under the terms of your premises license. If you wish to sell alcohol as part of your takeaway service, you will need to check whether the terms of your premises licence permit you to sell alcohol for consumption ‘off site’. If not, you are currently only able to sell food and non-alcoholic drinks as part of your takeaway service. However, we are aware that there has been some lobbying of government to ask for these rules to be relaxed also – so watch this space for any changes.
- If you intend to provide hot food or hot drinks between 11pm and 5am, you will need to check whether your premises licence permits late night refreshment.
- If your premises are leasehold, you should check whether there are any restrictions within your lease as to the permitted use of your premises.
- You will need to take precautions to ensure that food is safely prepared and that your takeaway service is operated in a safe way, which follows the principles of social distancing. You should comply with the measures in ‘Safer Food, Better Business’ food hygiene guidance. The government has also published some further guidance for food businesses during the pandemic. Key guidance around social distancing includes:
- no orders should be taken in person on the premises – this should be communicated to customers by appropriate means such as signage;
- you should only take orders online or by telephone;
- consider implementing staggered customer collection times – customers should be discouraged from entering the premises until their order is ready;
- customers arriving without having already placed an order should be encouraged to leave the premises to place their order by telephone or online, and to return at a designated time for collection;
- customers whose orders are ready should enter one at a time to collect orders and make payments (preferably by credit or debit card); and
- you should discourage crowding outside the premises. Where possible, queue management systems should maintain the 2 metres separation.
5. Whilst there is currently no evidence that the virus can be passed on through food, you should obviously ensure that your staff are fit to work. You should be aware of the guidance and requirements as to when staff may need to self-isolate or shield. For a summary of employment issues arising from COVID-19, see here.
What about my rent during COVID-19?
We understand that pubs and restaurants will be seeking to cut costs where possible and make ends meet. For lessees and tenants, some Pubcos have already announced rent holidays. The Morning Advertiser has reported that, following the lead of Greene King, Hall & Woodhouse has suspended rent payments for 8 weeks, Admiral Taverns has cancelled rent for its licensees until end April and Fullers has suspended commercial rent until an unspecified date. By contrast, we have not yet seen any similar concession having been made by Enterprise Inns – although it has notified its tenants that any loss of trade caused by Coronavirus will not be covered by the group’s insurance.
The payment of rent will no doubt be a primary concern for all tenants in the current circumstances. Some landlords and Pubcos are not famed for their lenient approach towards tenants, although we hope that the sector would see a reasonable approach in these unprecedented times.
However, the Coronavirus Act 2020, which was passed on 25 March 2020, provides some ‘rules’ which will apply to landlords and tenants in during this emergency period. This includes a moratorium on forfeiture/re-entry for non-payment of rent during the relevant period, however rents will continue to accrue and remain due. Further information about this can be found in our blog here.
What else can I do?
The government has launched a range of support which may be available to pub or restaurant business owners, details of which can be found here.
We would also highlight the following considerations:
- Most pubs, restaurants and hospitality businesses will hold a Music Licence (issued by PRS and PPL) to enable music to be played within the premises. Many will be paying, or have paid, for licences for periods during which they are now closed and have no need or requirement for the licence. PRS/PPL have issued guidance in relation to the Music Licence, confirming that businesses will not need to pay for times when they are not trading – guidance over how this will work can be found here.
- You are also likely to have a number of contractual arrangements in place for supplies or for the provision of services, for example, waste collection. It may be that those suppliers are unable to provide the services contracted, or it may be that you do not require those services whilst your business is closed. You should review any relevant contracts to determine what should happen in those circumstances. Some contracts will include force majeure clauses which may apply if your supplier is unable to provide the service. Some further information about these matters can be found here and here.
- As the situation develops, many will be in an extremely difficult financial position and experiencing an adverse impact to the cash flow of your business. If you operate as a limited company or a limited liability partnership, you will continue to be subject to specific duties. Sole traders will also have to consider their duties to those to whom they owe money, now or ahead. Businesses must not usually trade whilst insolvent (“wrongful trading”), which includes not paying debts as they fall due, otherwise there can be personal liability implications. The government’s announcement on 28 March to introduce a temporary removal of personal liability for “wrongful trading” during the pandemic (applying retrospectively from 1 March 2020) will come as some relief to those running affected businesses. The government is expected to make further announcements of further reforms to the UK’s insolvency laws to protect businesses from creditors seeking to initiate insolvency proceedings at this time. However, these changes only paint part of the picture. Your business may have been struggling for some time and under long term pressure from creditors. Whilst trade may have significantly worsened in the past few weeks, protection from personal liability may only be specific to that period. None of what has been announced or is anticipated will discharge your duties for the preceding period. Now (more than ever), you will be expected to have a handle on (and record) your current, short, medium and long-term ability to continue to trade, even though it is not presently clear how long trade will be affected. This gives rise to a minefield of issues. It is more important than ever to regularly monitor and record the cash flow position and prepare forecasts against different trading scenarios. Taking advice early on is key. If you find yourself facing these issues and would like some practical and legal guidance as to what you should be doing at this time, our specialist restructuring and insolvency solicitors can help with business contingency and continuity planning to help avoid protect your position and provide options for your business.
- In particular, for licensed businesses facing financial challenges, it is important to remember that your premises licence is an asset of the business and should be preserved and maintained.
What if I close the business?
If you decide to close your business completely for the time being, you should bear in mind the following considerations:
- You may be required to notify your insurer if your business premises are unoccupied, or your insurance may require you to check the premises at a certain frequency.
- If your premises licence will be due for renewal whilst you are closed, you will need to make arrangements to check post and make any necessary payments to maintain your licence.
- You should ensure that the police have correct key holder details for your premises if it will be unoccupied.
- You may need to review and update your fire risk assessment if your premises will be unoccupied. You should also consider any issues in relation to access if there are any flats above your business premises – do they have self-contained access or is access only through the business premises?
- If you have CCTV, you should consider issues in relation to monitoring of and access to footage.
- If you serve draught beer, you should follow best practice in relation to cleaning of beer lines, turning off gas, glasswasher and dishwasher cleaning and draining. Cask Marque have prepared some helpful guidance in relation to bar and cellar closing procedures.
- Kitchens should be cleaned before leaving and food should be stored safely and correctly in line with best practice. Any food wastage should be properly disposed of.
If you would like further information, please get in touch with our licensing solicitors or our restructuring and insolvency solicitors by emailing email@example.com or calling 01202 786187.