While I write this, 162,000 people have died from COVID-19 in Europe. This figure comprises in most countries only tested, hospital fatalities. If ‘excess deaths’ were included ‒ the count of deceased exceeding the number of people typically dying at this time every year ‒ the death toll of the corona epidemic could be closer to 300,000 and counting.
As we know, most affected were the UK (35,000 official COVID-19 fatalities), Italy (32,000), France and Spain (28,000 each). Malta (seven) and Greece (165) were among the least afflicted. This was not luck alone. The key was speed. Closing borders, shops, work places, public spaces and confining people at an instant kept infection rates down.
Reacting to the menace within hours rather than days or weeks saved many lives which would otherwise have been lost. What helped was citizens’ collaboration. Without everyone willing to play along it would not have worked. It is impossible to police sensible behaviour of an entire population.
Yet locking down a country was by comparison the easier part. How to drip feed our economy to keep it alive and how to open up again ‒ and at what speed, to avoid a flaring up of the decease ‒ is a much more difficult question. We are a small island nation dependent on international trade and travel. Like in Greece, tourism is an important sector of our economy. Fifteen per cent of our national income can be attributed to holiday-makers.
Air traffic is still in the doldrums, hotels are still padlocked. With new safety rules now decreed, we tardily pick up where we left off. We do not question how long it will take to get back to normal. Normality is still too far away to fathom. What we ask is: will we be safe? Can we earn a living?
Restaurants are cautiously opening up since last week. Most fear that demand may stay weak and regulations will prove too onerous to operate profitably.
I have talked to some of my favourite restaurateurs a few days prior to the official reopening of the restaurant scene. March 13, the day the government ordered the closure of eateries, came as a big shock to all of them. The only good thing about it was its clarity.
The UK’s Prime Minister Boris Johnson had just “recommended” that diners stay at home, leaving pubs and restaurants in limbo. Deprived of meaningful income they were still saddled with obligations towards their banks, landlords and employees without any possibility to claim loss of business insurance. Even in the absence of patrons they had to stay open, at great loss.
Like other European governments, Malta offered meaningful, if time-limited, payroll support. Publicans who decided to mothball their businesses instead of closing it down were offered a basic salary subsidy for waiters and cooks until the end of June. And BOV agreed to suspend all credit obligations for six months – whether out of kindness or because they did not want to sacrifice their favourite restaurants I do not know. But this rare act of banking generosity certainly helped.
Even if we return to a future resembling the past, the hospitality industry will change in profound ways
To maintain a restaurant on a going concern basis is nevertheless a risky proposition. Many places will depend on tourists, who may fail to reappear. The diminished income of regulars may not allow them to frequent restaurants as often as they have done in the past. Office workers dropping by for lunch may not do so when many still work from home. And social distancing rules will make many small restaurants unviable.
Just think of my beloved Da Pippo in Valletta, or Ambrosia, which I have frequented for 20 years now. On a good day, and until March 13, when the shutters came down, every day was a good day for Da Pippo, patrons were sitting on each other’s laps, so crammed was the place usually at lunch time. One needed to know the owners very well to be assigned a few square centimetres at a table. Social distancing does not square with the place at all.
Christopher Farrugia, chef-proprietor of Ambrosia, did not want to risk uncertainty. He closed his restaurant in March indefinitely, laying off all his waiters and kitchen personnel ‒ literally his family. He does not intend to reopen in the next few weeks.
“It’s not about disinfectants or masks, no matter how stifling in the summer heat. According to the new rules I can only operate inside or outside. Outdoors, tables have to be spaced two metres apart, inside three metres. With a lot of math I may cater now for a maximum of 12 people at any time. This won’t even cover my rent, let alone the cost of staff and foodstuffs. To start is a stillbirth.”
Carl Zahra, owner of Rabat’s fine dining place Fork & Cork, prepared for the opening meticulously. During the shutdown he kept himself busy with food deliveries and pick-up-menus for regulars. “It was not a money earner, but helped me to stay connected and to keep my sanity.” Carl had stocked up on sanitisers and face shields well before the opening.
He is aware of the problems he faces running a small and intimate dining place. He hopes to get his calculation right by serving guests on his numerous pavement tables. “The government paid me and my staff €720 net of social insurance up to now. It was a big help. And it was a big relief too that my bank let me skip mortgage payments.”
Michael Diacono is one of the best known chefs in Malta. Together with his nephew he has been running the legendary Guiseppi’s now for quite a few years in the Salini Resort hotel. There he’s relatively well positioned to navigate all Corona-drawbacks. Like my beloved Tartarun, his restaurant is spacey, allowing for ample distance between the tables. Other than the Salini Resort, his guests are almost without exception locals, cultivated for 30 years at the old location in Mellieħa. There’s ample parking, a large outdoor space and a kitchen allowing for working at a safe distance. If anyone can manage the precariousness of the immediate future, it will be Michael.
“We are ready to welcome all our friends back,” he says, “We have missed them.” His landlord, the hotel, will struggle though. For many months to come, it stands to fear, Michael Diacono’s rental payments will be the hotel’s main income.
Even if we return to a future resembling the past, the hospitality industry will change in profound ways. What this means for us retail investors I will analyse in my next column.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice or advice on the buying and selling of financial products.
Andreas Weitzer, independent journalist based in Malta
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