Eat Out to Help Out: What’s the Impact for Hospitality?

Harriet Francis

The ‘Eat Out to Help Out’ scheme, allowing those who eat out in participating restaurants to a state-funded 50% discount on food and soft drinks (up to £10 per person), was introduced by Chancellor Rishi Sunak to give a much needed boost to the hospitality industry, and has seemingly been a resounding success. Some 84,000 outlets across the UK signed up, and The Treasury said more than 64 million meals were ordered during the first three weeks, the equivalent to nearly every person in the country.  However, with the scheme finishing yesterday, and no signals from the Chancellor that the Treasury will continue the scheme which will potentially cost an estimated £500m to the taxpayer, the future for hospitality is once again uncertain.

About 80% of hospitality firms stopped trading in April and 1.4 million workers were furloughed – the highest proportions of any sector – according to government data. The industry body UK Hospitality says around a third of restaurants and bars have still not reopened despite the easing of lockdown, as people remain nervous about the spread of the virus. Eat Out to Help Out has boosted sales in the hospitality industry but the end of this scheme has been met with real concern as to what will happen to this sector and the jobs it supports now that the e offer has been withdrawn.

Industry Reaction:

The scheme has broadly been seen in the hospitality industry as a success. But some businesses have spoken of the impact the scheme has had on business during other days of the week. Other hospitality employees have spoken of a decline in tips, and an increase in abuse from customers. While the scheme has proved popular with diners and restaurant chains, it has attracted some criticism over whether it would prove to be a sensible use of taxpayers’ money. There are concerns that some diners will have switched plans to dine out on full-price days in favour of government-subsidised days, with Jim Harra, the chief executive of HMRC, writing to Sunak last month to warn of “the uncertainty surrounding the value for money of this proposal”.

The scheme has been expensive to say the least. Treasury estimates have put the cost at around £500 million, however it is prudent to remember that the sector is also a huge employer, supporting over 1.8 million jobs, therefore the Government sees this as investing in the sector to save jobs. It is worth noting that unemployment is also expensive for the Treasury, something that is set to rise over the coming months, with the unemployment rate now at nearly 4%.

What next?

Leading figures in the UK’s hospitality industry have been calling on the Government to extend its Eat Out to Help Out scheme into September, traditionally a quiet time for restaurants. While Eat Out to Help Out has given the sector a significant boost, increasing footfall and sales, businesses are still struggling, particularly in city centres, which are lacking of commuter traffic and tourists. Many chains and smaller, independent restaurants have chosen to continue the scheme, but to subsidise the 50% themselves as the they believe discounted dining days are beneficial to trade and have resulted in huge increases in customers returning back to dine inside.

Winter is soon approaching and is also an unforgiving time for the hospitality sector. Colder weather will mean restaurants cannot accommodate diners outside and, as the possibility of a second wave becomes more likely, customers are likely to grow more anxious about social distancing and the fear of catching the virus and a second wave. Eat Out to Help Out definitely helped kickstart some sort of recovery for the hospitality industry, however, if the sector struggles as it previously has done, during winter, Rishi Sunak and the Treasury may have to introduce the scheme once again or find alternative ways to boost public confidence.

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