An economic hell without bars | Business

The state of alarm has left the San Miguel (Madrid) market empty, always crowded.Claudio Alvarez / EL PAIS

A few days before the state of alarm, Antonio Vázquez decided to close his two hotels in León and his five restaurants by the By Vamuca group, one of them in Madrid. “It looks like we’ve been four months and we’ve been four days,” he snorts on the other end of the phone. Does damage count. “On Friday (around the 13th) we fed, but canceled the dinners. Hosted customers checked out on Saturday. Then it was not very clear the scope of a cessation due to force majeure. ” Two days later the state of alarm began. The sequence that relates in his business is lived these days by thousands of companies: ERTE for the majority of the workforce and the few who telecommute attend to the paperwork of clients, suppliers, taxes or cancel the weddings and communions planned for Easter. The economy goes out to save lives and the country of the sun and tapas shows that it can go a few weeks without its 183,306 bars, 78,950 restaurants and 16,600 hotels. At least for now.

The fade to black has triggered an economic shock never seen before in a sector that employs 1.7 million people and generates 123.6 billion euros, 6.2% of GDP. Between March 1 and March 21, Infojobs records that 75% of job offers on the so-called Horeca channel (hotels, restaurants and cafes) have disappeared from its platform. Perhaps carelessly there are those who are still looking for a waiter or receptionist.

“The sector is experiencing a very strong hiatus”, they admit from Damm. 60% of its Mediterranean beer is consumed through this channel. When everything exploded, they began to accumulate stock in their warehouses but, as the days passed, they stopped producing the formats for bars and restaurants (returnable containers and barrels), which only partially compensated with the production for supermarkets and convenience stores. feeding. “Brewers are very affected by it. Let us consider that these months mark the opening of the terraces. Our consumption is closely linked to the enjoyment of sporting and musical events ”, they say. Also to an international tourism that will not return, at least in the short term. From the Spanish Brewers Association, its director Jacobo Olalla paints a bleak scene: 67% of beer is consumed outside the home. It represents between 25% and 40% of the net income of the bars. “There is a lot of employment associated with it, from sales representatives to technical maintenance services for barrels at almost 300,000 points of sale.”

The same occurs in the meat and fishing sector. The 30,000 professionals who go to sea in Spain are devastated by the plummeting price of fish markets in recent days. Without restaurants, the slaughterhouses are not having a good time either. The demand for products such as chicken has risen in the supermarket, but the collapse caused by the closure of restaurants and fast food outlets has begun to be noticed. UPA warns that the damage is already being felt, especially in the sheep-goat and pig sectors. “The restaurant is the main destination for suckling pigs and suckling pigs, products that Spaniards are today little used to cooking at home,” say the union. Without tourism, in addition, many small cheese factories can be affected.

José Luis Yzuel, President of Hospitality of Spain, is about to break the virus but is still coughing. He complains that the government’s measures come in small print, such as the one that forces him to keep his job for six months in exchange for benefiting from aid for the ERTE. “It is mixing churras with merinas. Why is a compulsory aid tool given a tagline in a sector that works seasonally, where each establishment is different? Do we believe that when this is over, people will go out to drink canes and hug each other? ” This is what public aid has, which requires certain commitments. Another thing is if they will be successful. “Large companies have all the solutions, but there are none for small ones and you need to continue selling to make ends meet,” he protests. He understands that legislating in a pandemic is difficult, but appeals to the sensitivity of the Administration. “We are an absolutely flexible sector, with the crisis we suffer, but we endure the pull. Now we don’t depend on us, but on the response of the market ”.

Indeed, in the last 20 years, with a great recession in between, employment in Spanish restaurants has doubled thanks to increasing tourism. And in the last five years the boom has been spectacular, in quantity and quality. Gonzalo Fuentes, head of Hospitality and Tourism at CC OO, appeals to that brilliant past so that he regrets so much and puts his shoulder closer. “We come from 10 years of prosperity. They have made more money than ever and now there are unscrupulous people who do not want to keep a job. We are very concerned about the discontinued posts, we are talking about thousands of workers who were hired for Easter and who are going to stay at home ”. He relates that two weeks before the global alarm was unleashed, in early March, many hotel chains were already turning off the tap with layoffs. “If the summer comes bad we will see, but we cannot speak of ruin now when we have been closed for two weeks,” he complains.

The problem is that it’s not just them. Behind bars or coffee shops is a chain of suppliers perhaps longer than the RNA of the virus. José Manuel Fernández, general director of Fedishoreca, the union federation, relates, for example, how the distributors have remained (there are some 4,000 in Spain). “There is only a little work left in serving service areas, especially drinks.” The points of sale begin to communicate that they will not pay the pending receipts, at least until the situation is clarified. And that unleashes a wave backwards. “In hospitality in general, where the self-employed and small companies stand out, they will not have the liquidity to reopen, buy, supply themselves … If, for example, a distributor stops paying him, do you think that when that client opens Is your restaurant again the dealer going to give you credit? ” He also regrets the fine print of government aid. It is Tuesday and the lines of the guarantees had just been defined: up to 80% backed by the State, but processed through the bank. “When the hotelier’s request arrives at the bank’s risk department, they will not give him a penny, because they are not solvent. There are hospitality companies that are barely kept. That they have grown these years does not mean that they are prosperous. ”

The business of Juan Peiró, a frozen food and beverage distributor with two delivery platforms in Valencia and Ibiza, is almost 100% geared towards hospitality. “We calculate three months of hiatus. We have asked for the blocking of payments to suppliers and the reaction is being exemplary, we have also admitted that our clients do not pay us. ” They have about 2,000, but only five, he says, with sufficient financial capacity to endure so long without help. “The vast majority of the hospitality industry is people who live daily. They have rents to pay, with little margin. ” Although perhaps not everyone has the box so empty. A businessman who asks for anonymity remembers the black money. “It is going to stop circulating,” he says, and the one that has been accumulated illicitly is not going to serve as a lifeline to keep the job, “which is what is needed now.”

Everything will depend on how long it takes to recover normality. For Raymond Torres, director of Conjuncture of Funcas, the sector will suffer a negative impact, even if there is a rebound from the summer. “Only part of the demand deficit during confinement is” dammed “- frozen now to express itself later – and will translate into more spending during the rebound. However, a large part of the deficit in spending on restaurants, leisure, and tourism will have been lost. ” Given this, two things can happen: a part of the expense is diverted to other goods, for example those necessary during confinement, including leisure services on-line, and that the savings rate of families be increased. Nuno Fernandes, professor of Finance at IESE, warns that if the confinement lasts up to three months, the fall in national GDP would be six points and if it reaches the summer, almost 10. In his opinion, the effects of the pandemic because comparisons are made that are not correct, “like that of SARS or the financial crisis. It cannot be compared because there has been nothing like it in the last two centuries. ”

This would resemble, to put a simile with wine, the phylloxera crisis that devastated crops at the end of the 19th century in Europe. Today the wine sector, which invoices in Spain about 2,000 million euros, depends 41% on the Horeca channel. Javier Santafé, director of the Denomination of Origin Navarra, believes that we are facing a catastrophe. “But it is even more serious for small producers, those who do not have or have little presence in the food channel.” José Luis Benítez, general director of the Spanish Wine Federation, relates a complicated and disparate situation in a business with 4,000 wineries. “30% of sales can be affected. Their financing is based on working capital, many are affected by not having the financial muscle to face that distributors do not pay them or ask for deferrals ”.

The winemaker Rene Barbier, president of Clos Mogador in Priorat, is not among those who will have the worst time, because his wine has more demand than the production capacity of his vineyard, but he carefully watches the foreign markets that he opened after the last crisis (States United among them), something that hundreds of exporting companies are also doing. “I’ve been going crazy for two weeks trying to make everything work. In Switzerland, for example, they are paying me very well because there the measures have been different and the companies have liquidity. I can function but other people cannot ”, he admits. Other producers are at their worst and some people think that if the situation collapses, they will have to leave the grapes in the vineyard this summer.

Coffee for no one

Although Spain is one of the main wine producers, things do not improve for those who import the products that supply the Horeca channel, such as coffee. Ricardo Oteros runs Supracafé, a company that works for hotels and restaurants. “We have scheduled our purchases and established supply contracts months in advance. Perhaps that is not the main problem now, since we can seek or negotiate financing for those purchases. We assume that once the crisis period is over, things will return to normal. ” That normality, he says, “is going to be very different from the previous normality.” He is concerned about employees and their families, about customers and their financial situation, “and whether they will be able to overcome it.” And again, the chain effect of defaults with the addition that they work with a subsidiary in Colombia, where they are also experiencing difficult times. “Interrupting our purchases does not help, we have to work so that this does not end up affecting, as always, the most vulnerable.”

The same is true of food franchises. Some, like Restalia or Barra de Pintxos, have decided not to collect royalties from their franchisees. Eduardo Sancho, Marketing Director of the latter, a chain with a dozen stores between its own and third parties, says that they have also begun to negotiate the rental of the premises while they are still waiting for the Government to take measures that serve as a legal basis. to justify non-payment of rent. “I do not know what will happen, I hope that something comes out quickly because solidarity sometimes stands out for its absence.” He is concerned about the return to normality, how customers will behave and whether there will be social distancing measures, such as capacity control. For Deusto Business School marketing professor David Ruiz, there are big doubts about it, especially about whether habits will change with respect to the online channel and whether food delivery companies can benefit clearly. “If we take as an example the impact of attacks in tourist countries we see that it is easy to lose confidence and that it costs a lot to recover it. There is nothing comparable to this crisis, but the closest thing is that of 2008. We should expect a similar or worse situation. “

If the doubts are endless, the solutions to curb the tide seem like sand walls. The Leon businessman Antonio Vázquez, who also produces wine (almost five million bottles) is entirely due to the sector, where for now he sees an atmosphere of collaboration between companies. “We all depend on everyone, if this gets stuck … in the face of a global problem I only see one way: global solutions. Otherwise, this is going to be very complicated. ”

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