At the hands of the coronavirus and consequent lockdown in the UK, about 80% of hospitality firms stopped trading in April 2020, and 1.4 million workers were furloughed. The hospitality sector has been one of the industries to be hardest hit by the pandemic and there are concerns about whether the sector will be able to fully recover.
The government-funded ‘Eat Out to Help Out’ initiative set aside £500 million to allow participating outlets to offer dine-in customers a 50% discount on all food and non-alcoholic beverages, with up to £10 off per head. At the advent of the scheme in August, 85,000 eateries signed up to participate. The scheme is due to run on Mondays, Tuesdays and Wednesdays until the end of August. Chancellor of the Exchequer, Rishi Sunak, stated that he hoped that the novel scheme would coax the British public out of their homes and into safe eating spaces to stimulate the sector back into business.
During the first two weeks of the scheme, Sunak’s hope seemed to have been fulfilled. Approximately 35 million meals were served under the initiative in the first half of August, a figure almost equivalent to over half of the UK taking part. According to the leading industry tracker CGA, food sales in pubs and restaurants were up by 100% on the first Monday of the scheme, and up 95% on Tuesday. Research agency KAM Media found that 3.3 million customers had used online search tools to find out which establishments were involved in the scheme. Industry participants such as Stephen Wall, the managing director of Pho, has said the initiative has benefitted early week figures and encouraged the public to dine out safely.
Evidently, the scheme has generated considerable business for participating restaurants over August. However, there is enduring concern that the industry is still in crisis. Restaurant owners such as Lubeck Sredojevic, who owns a restaurant in South Croydon, worry that whilst the scheme has incentivized floods of reservations at the beginning of the week, this influx will detriment weekend trade, rather than contributing to an aggregate increase in general business. Moreover, it seems that the spike in reservations has not necessarily increased overall sales, as people are spending considerably less per person.
Hugh Osmond, the founder of Punch Taverns, has said that the scheme offers a “good message” but is not a game-changer. He stipulates that the sector will still need financial aid from the government if it is to weather this difficult time. Indeed, data from the Centre of Retail Research has illustrated that 1,467 restaurants and casual dining outlets have closed this year. This figure is 59% higher than the 922 establishments that shut their doors in 2019, indicating that the industry is not out of the woods yet by any means.
There are also pressing concerns surrounding what will happen once the scheme ends, as it was due to end come September. Many places will face pressing rent obligations in September as many of them will still be in arrears owing to rent suspension during the pandemic. With this financial hit, alongside the phasing out of furlough and the end of the ‘Eat Out to Help Out’ scheme, Sacha Lord comments that the industry may see a flurry of closures that have merely been delayed by the August initiative.
There have been calls from business leaders for the government to extend the initiative. Many have voluntarily decided to continue the scheme into the coming months without the government subsidy, such as 56 North and New Chapter in Edinburgh. However, these eateries will be taking much of the financial hit themselves if the government does not extend the scheme officially, so it will be a question of whether the increase in sales will be enough to offset the financial impact of the discount.
The ‘Eat Out to Help Out’ scheme has provided a much-needed boost that has kept the hospitality sector afloat throughout August. However, with September beginning and other challenges on the horizon, it is not clear that the novel initiative has provided the sort of long-term financial stability that will settle the minds of restauranteurs and pub-owners all over Britain. There are still many storms to weather before the industry can breathe a sigh of relief.