is eat out to help out a success?
On 15th July 2020 chancellor Rishi Sunak announced the “Eat Out to Help Out” scheme to help bolster the revenues of the flagging hospitality sector. It boils down to a 50% discount on food and non-alcoholic drinks purchased to consume onsite, up to a maximum discount of £10 per person (inclusive of VAT) with no minimum spend. The discount is available only on Mondays, Tuesdays and Wednesdays in August when restaurant trade is low relative to the weekend. A couple of weeks in, is Eat Out to Help Out a success?
The reason for this scheme is obvious. As a direct result of the Coronavirus pandemic forcing people to stay indoors and stay apart, restaurants, pubs and cafes have been among the worst hit. The Centre for Retail Research has forecast 20,620 locations will shut down and over 235,000 job losses. Annual sales in the sector are predicted to fall by more than 4%. ONS says 80% of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed – the highest proportions of any sector.
Any discount encouraging diners back to their local eateries is welcomed by retailers and the public alike, and the British love a bargain. The Resolution Foundation predict that the hospitality sector will be a great economic kickstarter. The sector directly contributed to recovery after the 2008 downturn.
How many businesses have signed up for Eat Out to Help Out?
Restaurant owners had to register for the scheme, and were keen to sign up.
Up to 16th August 85,000 individual restaurants had signed up for the deal. There’s a definite appetite for this.
As of 9th August HMRC had received 14,000 claims for 10.5m covers. A week later this number had skyrocketed to 48,000 claims for 35m covers, worth £180m. That’s a little over £5 per head. No doubt these figures will continue to snowball as retailers put in their claims – I suspect some will wait until all their August sales are in before claiming.
Booking service OpenTable showed that restaurants have been on average 27% fuller than they were during the same period (Monday to Wednesday) in August 2019.
Stephen Wall, Managing Director and co-founder, Pho, said:
The Eat Out to Help Out scheme has really been amazing. It’s so nice to see our restaurants full of happy staff and customers again. It has certainly benefitted our early week figures and seems to have encouraged the British public to dine out safely, as our restaurants are filling up and staying busy throughout the weekend, too.
There’s evidence that this is not cannibalizing weekend traffic, i.e. eating earlier in the week is not stopping people going out at the weekend. Aggregated data from hospitality software Fourth Data also shows that there was no drop off in trade later in the week. It’ll be interesting to see how this continues as the weather worsens. After a heatwave the weather has been noticeably worse. Many diners continue to seek an outdoor table for their own peace of mind. Our family are not ready to eat in a restaurant yet, so outdoor seating has been a premium. Anecdotally, I’ve struggled to get into places. The demand is clearly there.
What are the negatives?
So far, so good. But it’s not all been good news. Some have claimed some customers are being rude, and staff are suffering mental and physical strain. Gingeybites on twitter told me:
Yes, a friend of mine runs a pub and he said it’s as busy as Christmas – I’m pleased as it means they’re making money to stay open but he’s finding it all very stressful and it’s putting a huge emotional toll on him and his team.
— Alex aka Gingey Bites (@Gingeybites) August 19, 2020
And this story is backed up elsewhere in the press. Sudden boosts in customer numbers put strain on an unprepared kitchen, and with diners likely over-ordering to maximise their discount, even the usual amount of customers will be creating a bigger order. This causes delays in the kitchen, which trickles down to serving staff. Combined with trying to feed a family in an already stressful school holiday period, some customers are venting their frustrations. Let’s not forget we are still supposed to be social distancing as well, and some eateries are seeing crowds of people.
Restaurants are completely in the shit.
We need you. We need you on #EatOutToHelpOut out too. It is helping. BUT, please don’t be rude to us. Yes we are in the shit but we’re not desperate enough to accept rudeness in return for business. Same rules apply.
Thank you 🙏
— ELITE BISTROS (@Elite_Bistros) August 13, 2020
There is an element of social disparity too. The consumer benefit is going to those who could already afford to eat out, at a now reduced rate. I don’t believe those who couldn’t have suddenly found restaurant-going affordable.
There's folk who've lost their income but aren't even eligible for UniversalCredit[UC]. Some of the eligible have been sanctioned
— gud (@seicilop) August 13, 2020
Is Eat Out to Help Out a Success?
In terms of driving footfall, the Government scheme looks to be a success. Ipsos Retail says the yearly high street footfall is down 53%. The atmosphere is described as ‘nervous and hesitant’. Queues and the shift to online contribute to marked declines in customer numbers.
But retailers and restaurateurs need to consider their staff when the boom period is over. Surges in customer numbers plus frustration levels similar to packed bank holidays have seen waiting and cooking staff pushed to their limits for extended periods. A gesture of goodwill such as a day off in lieu, team away days or gifting a subscription to a wellbeing service such as Headspace would be the thoughtful thing to do (that said, I appreciate this is just one more thing to pay for in this tumultuous environment).
Restaurants are not out of the woods yet. As the weather worsens diners will want to head indoors and some (like myself) are still hesitant to spend long periods in a public space. Gingeybites recent (unscientific!) poll lays this bare:
Time for a poll – starting to think I’m the only person not eating out in restaurants and going to the pub yet? Have you been yet?
— Alex aka Gingey Bites (@Gingeybites) August 18, 2020
I’m pleased to see anything that encourages people to visit restaurants – and hopefully they are sampling local ones – and the more that offer a takeout service, the better. This is money spent in your local community that supports local jobs, which has been a theme of the lockdown. I appreciate the major chains such as McDonald’s and Costa getting on board too though, as so many people eat there. There are requests that the scheme will continue into September, and unofficially some retailers may choose to do this off their own back too.
With a few days left in the scheme, we wait to see how this progresses. I don’t know that the sector will be magically rescued, but maybe consumer confidence has been helped slightly. Let’s all hope for a return to normal as soon as possible.