NO PARTY

How bars, restaurants weathered Covid-19 effects

Closure of bars accounted for the loss of 57,000 jobs between March and September.

In Summary
  • The closure of bars caused major losses for bar and restaurant owners as it meant completely no business for them.
  • Consumption of alcohol was now restricted to homes with purchases from supermarkets and wines and spirits shops allowed for a specific period of time.
Anita Nyambura a service girl at Zipang bar and restaurant dust alcoholic drinks in preparation of the reopening of bars on September 29, 2020.
Anita Nyambura a service girl at Zipang bar and restaurant dust alcoholic drinks in preparation of the reopening of bars on September 29, 2020.
Image: MERCY MUMO

In July this year, President Uhuru 'stopped reggae' for Kenyans shutting down bars indefinitely to curb the spread of the deadly coronavirus.

Uhuru also banned the sale of alcohol in restaurants and eateries, forcing Kenyans to enjoy their drinks from their houses.

The closure of bars caused major losses for bar and restaurant owners as it meant completely no business for them.

"2020 has been a really bad year for us due to the pandemic, this year has seen as operating with low sales of even 0.8 per cent from April to June with the ban of alcohol in restaurants," said Bavaria restaurant, head of operations, John Ireri.

Ireri noted that most of the restaurant's clients were from nearby offices, and the work from home directives had offices empty at that time. 

The restaurant had to retrench workers from 40 to 16 staff to be able to remain afloat.

"The delivery segment improved slightly with the pandemic but it still doesn't meet what we used to sell, we are hoping for a better 2021," said Ireri.

Consumption of alcohol was now restricted to homes with purchases from supermarkets and wines and spirits shops allowed for a specific period of time.

The consumption was also affected by the ban of gatherings and events such as weddings which traditionally drive up alcohol sales.

The closure of bars, however, saw an improved performance of wines and spirits in various estates for the period.

Overnight, wines and spirits (alcohol) outlets were cropping up at every corner, most next to or across where pubs are located.

Aerias Mwirori a chef at Blend Bar and Restaurant cleans the floor in preparation of the reopening of bars on September 29,2020.
Aerias Mwirori a chef at Blend Bar and Restaurant cleans the floor in preparation of the reopening of bars on September 29,2020.
Image: MERCY MUMO

"Closure of the bars was a bad thing but it really saw my business grow this year, I recorded more profits than the previous years," said Stephen Musyoka who owns Bonanza liquor store in Mlolongo.

The continued closure of bars also cost sorghum farmers, workers and the government Sh9.1 billion, according to the Alcoholic Beverages Association of Kenya (ABAK).

Over 6,300 farmers will also suffer forgone revenue worth Sh419 million as the demand for barley and sorghum declines by three million kgs and 4.4 million kgs respectively.

The reduced consumption of alcohol and job losses cost the government approximately Sh5.88 billion in excise duty, value-added tax and fees.

The county governments also lost approximately Sh3.4 billion which accounts for the issuance of bars and liquor licences.

ABAK, which brings together key players such as Kenya Breweries Limited (KBL), said that the closure of bars accounted for the loss of 57,000 jobs between March to September.

For firms who manufacture alcohol, this plummeting business saw them record major profit drops.

East Africa Breweries Limited (EABL) announced a 39 per cent drop in net profit to Sh7 billion for the year ended June 2020.

On August 26, President Uhuru then set the stage for reopening of bars and night clubs after directing the development of rules to guide sit-down drinking in public places.

He asked bar owners and the Ministry of Health to jointly develop guidelines that would promote social distance and hygiene in the quest to strike a balance between promoting the hospitality industry and curbing the spread of Covid-19.

When the bars started operating this brought to life more than 20,000 outlets countrywide, a move that has given hope to more than 300,000 Kenyans employed directly by the outlet.

At least 5,000 bars, entertainment spots, and restaurants had closed down in Nairobi alone with another 4,000 in Mombasa, according to the Pubs Entertainment and Restaurant Association of Kenya (Perak).

During the closure period, March–September, gross sales for beer reduced by more than 50 per cent, ABAK said, a huge revenue deficit for KRA.

With effect from June 30, 2020, spirituous beverages of alcoholic strength not exceeding six per cent attracted an excise duty at a rate of Sh110.62 per litre.

Spirits of undenatured ethyl alcohol; spirits liqueurs and other spirituous beverages of alcoholic strength exceeding six per cent were charged excise duty at a rate of Sh253 per litre.

Beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages are charged excise duty at a rate of Sh110.62 per litre.

KRA was also getting Sh75 per bottle of beer as tax, the slow return to normalcy was a relief for industry players and KRA which has been missing about 60 per cent of excise duty payable by the industry.

Upon the reopening of bars, EABL announced a Sh532 million ($5 million) recovery fund to help pubs and bars resume trade post-lockdown.

The two-year plan dubbed “Raising the Bar” was part of the Sh10.6 billion ($100 million) kitty rolled out from June 1 in different markets through EABL’s parent firm, Diageo.

EABL made the recovery plan to offer targeted support like purchasing equipment such as hygiene kits, permanent sanitiser dispenser units, hand sanitisers, masks, and protection screens for bars that cannot maintain the one-metre social distance.

The firm offered the bars hardware and not cash through the recovery plan that comes in form of a free grant.

In November, the State gazette rules that required bars to hire Covid-19 liaison officers to ensure that drinkers observe protocols meant to curb the spread of the disease in the facilities upon a looming second wave.

Bars committed to cut sitting capacity by half under social distance rules, have contact free-bill payment, restrict drinking at the counters as the industry turned to self-regulation due to a lack of regulations from the State.

They were also required to close dance floors and reduce contact between staff and drinkers, designate spacious waiting and collection areas for couriers and customers as part of curbing the spread of the coronavirus.

Alcohol Beverages Association of Kenya, a lobby group for alcohol manufacturers and importers had in its petition raised concerns about unsafe socialising behaviour by some establishments operating with little regard to the Covid-19 guidelines.

Some entertainment spots are still yet to open months later such as Mojos in the Nairobi CBD and Lounge 108 in Gachie.