At this moment in our history, one is most likely to be right if they said,’there is no industry that has been spared by the adverse effects of Covid-19.’ The world pandemic has brought down many businesses down to their knees. Many workers have been retrenched as most companies are unable meet their normal productive capacities. The loss in revenue due to the reduced production levels will mostly likely affect most companies’ financial projections. The losses might not be evident now, but they will be when companies start publishing their annual reports at the end of the 2020 financial year.
Of the businesses that have been affected, bars and nightclubs owners are among them. This article discusses the likely impact that bars and the night clubs owners have faced, from when they were told to cease their operations, until at the time of this writing, when they had been partially allowed to conduct business again.
After a multi-sectoral team was set up to find measures to help curb the increase in the infection rate of covid-19, bars and night clubs were identified as potential places from where a number of people would get infected and thereby contributing to the increase in the number of cases. It was then that government announced the closure of bars and night clubs until 11/09/2020, on a day when the president opened parliament and announced a partial resumption of operations. This is approximately two financial quarters without business. Painful.
During the time of the closure, it is highly likely that bars and night club owners had lost on the much-needed sales revenue. Since they were not allowed to operate, it meant that even payment of rentals became very difficult among other fixed obligations.
There were reports of some landlords evicting their tenants due to accrued rentals. As if that was not a burden enough, bars and the night clubs owners had workers, and these workers were supposed to be remunerated so that they could sustain themselves for that period. Due to the fact that these businesses were not allowed to conduct their operations, this also meant that their main upstream supplier, Zambia breweries (ZB), was not making sales as it would normally make.
Like many large corporates, the company decided to put on its social good hat and dedicated itself in trying to contribute to the fight against this global pandemic. In a move that was taken as the company’s commitment to fighting covid-19, ZB through its country director Jose Moran, announced that it was reducing its beer production and instead embarked on the production of alcohol based hand sanitizer. The benefits of having a factory that possess economies of scope. This was not only a move to contribute to the fight against covid-19, but also a potentially profitable move; since beer was not selling as much, it was wise to start producing something that was on higher demand.
As per the president’s directive, bars and the night clubs have been allowed to operate, but only from 18:00 hours to 23:00 hours and only from Friday to Sunday. However, the question that begs an answer is; will the majority of them be able to stay in business considering the seemingly costs they have already incurred during their closure? Obviously, the reduced operating hours, will entail reduced revenue through sales, relative to before the closure, and this will affect their profitability and in the end we might just see them go under. Unless something is done, this seems like a very bumpy financial road for bars and the night clubs owners and their stakeholders.