Bain & Co certifies the collapse of restaurants
Horeca in Italy loses 27 billion in 2020, 700 million just in Christmas time
Bain & Company analyzed the data at the end of the year in the public business sector, using data supported by over 2,000 interviews across Italy to understand how the 2020 turnover will close. Bars and restaurants will close their Annus horribilis with a loss of turnover of 37% on an annual basis compared to 2019, equivalent to approximately 27 billion Euros. While in the first half of the year the losses vs. 2019 amounted to around 16 billion Euros, the recovery (higher than expected) in the summer months made it possible to close the third quarter with a more contained decline compared to the first quarter of about 15-20% compared to 2019.
The resumption of infections in the fourth quarter with the consequent restrictive measures and the early closures of bars and restaurants led to a new, sharp decline in HoReCa turnover, approximately 45% compared to the fourth quarter of 2019.
“Unfortunately, the summer with better than expected results was paid with interest from the much feared second wave. The 37% drop is unparalleled in history, at least in peacetime, if you consider that in 2009 the bar and restaurant sector dropped 'only' by 5%. Unfortunately, that's not all, the effects will also be important in 2021”, comments Duilio Matrullo, Partner of Bain & Company.
Large cities have suffered more than provincial areas, with more pronounced drops of 30-40%, driven by the significant contraction in tourism and the phenomenon of smart working which literally "closed" entire areas of activity that mainly served the lunch segment of work.
But in a context in which the pandemic, despite the hopes related to the vaccine, is far from being overcome, looking to the future there is a figure that adds further concern. For each month in the red zone, the contraction of the sector is estimated at ~ 70% compared to 2019, while the yellow zone brings losses of ~ 40%. So despite the creativity and also the speed of response, for example in resorting to delivery or take away, the prospect of still many months between -40% (yellow zone) and -70% (red zone) can represent the coup de grace for many who had resisted until today .
Finally, the closure of the restaurants on Christmas and New Year alone is estimated to lead to a decrease in turnover of 700 million Euros, equal to approximately 1% of the annual total of the HoReCa sector.
“We recall that HoReCa contributes over 4 points of GDP and employed 1.2 million people in 2019. In a sector with a large incidence of fixed costs, a decrease in turnover of about € 27 billion in 2020 alone, and a situation in 2021 far from resolution, the impact from the point of view of closing points of sale will be such as to bring to its knees thousands of small entrepreneurs and their employees, unfortunately the refreshments provided in 2020 and already approved for 2021 risk not being enough", explains Sergio Iardella , partner of Bain & Company. "The impact will then be dramatic not only for individuals points of sale but also for the entire upstream supply chain, from distributors to agri-food companies, the historic flagship of our economy. Never as in the next few years will a system response be necessary and also a coordinated impulse to consolidation and efficiency projects and digitization of the supply chain, perhaps also making use of funds from the Recovery Fund".
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