Following the announcements from the Chancellor of the Exchequer regarding the future of employment, as well as VAT and stamp duty holidays – he has also revealed the government’s ‘Eat Out to Help Out’ campaign to help kickstart the restaurant industry following the devastating impact of the COVID-19 pandemic.
To support restaurants and the people who work in them we’re saying ‘Eat Out to Help Out’.
— Rishi Sunak (@RishiSunak) July 8, 2020
The scheme will run throughout August, and the voucher will give households a 50% discount on the meals, up to £10 per head, on sit down meals and non-alcoholic drinks. The vouchers will be able to be used on Monday to Wednesday each week.
Sunak said: “This moment is unique. We need to be creative. To get customers back into restaurants, cafes and pubs, and protect the 1.8 million people who work in them, I can announce today that, for the month of August, we will give everyone in the country an Eat Out to Help Out discount.”
Luke Davis CEO and Founder of IW Capital, discusses the announcements: “This period has been incredibly challenging for every sector of business and especially the hospitality sector, in which many businesses rely on packed spaces to make the most of custom. Today’s announcements will come as a welcome boost to the sector as they encourage people and customers who are very conscious of their finances to get back into pubs and restaurants. Innovation will be needed to make new restrictions work for businesses and customers, but this is something that UK SMEs have in spades.
“Now, with this added support from the Government and as private finance providers, could be a fantastic opportunity to support businesses in this sector at a time when they need it most and with the biggest opportunity for growth. When lockdown and social distancing restrictions are eventually fully lifted this period could lead to a new age of innovation and improved customer experience in hospitality, making it an exciting sector to be a part of.”
Andreas Knürr, CEO of TIMIFY commented: “The new measures announced by the government mean that the hospitality sector can breathe a sigh of relief, especially SMEs that are the backbone of this industry. In particular, it’s pleasing to see the VAT cut from 20% to 5% on food, accommodation and attractions — a catalyst for getting hospitality and tourism businesses back up and running.
“Of course, this presents new challenges for SMEs navigating social distancing rules whilst managing an influx of customers. As such, bookings, queuing management and staff rotas will be more important to keep track of than ever.”
Eat out and help out is a brilliant idea but it may not be effective with many still being cautious, say tax and advisory firm, Blick Rothenberg.
Genevieve Morris a partner at the firm said: “Eat out / help out – this is a brilliant idea. Encourage people back to the pubs, restaurants and cafes – food bill is reduced but the Government will be relying on people continuing to pay for drinks and where this is beer and wine, spirits and ciders, they will benefit from the duty paid on the alcohol.
“ I’m not sure how effective this will be or what it will cost the Government – it’s hard to tell people to stay at home for three months and then do a U-turn and encourage them to go out without many people being left cautious. Covid-19 is still very present in the UK and people that have been protecting themselves and their families by staying at home are unlikely to be encouraged to go out with the offer of discounted food.”
Pubs and restaurants need sustained initiatives – short-term measures like ‘eat out to help out’ could cause more problems than they solve
Phil Mills, head of food and drink at Old Mill comments on what the chancellor’s announcements today mean for pubs and restaurants.
“The Chancellor, Rishi Sunak unveiled his mini-budget this afternoon, and there were some welcome announcements for the hospitality industry, most notably the cut in VAT, from 20% to 5% until January, which will make a huge difference to pubs and restaurants trying to get back on their feet.
“The Chancellor also announced the slightly less expected ‘Eat out to help out discount’ where throughout August, everyone will get a 50% discount, up to £10 per head, for meals eaten at any participating businesses, as well as a scheme where businesses will get £1,000 for each staff member taken off furlough and back into work.
And while any initiatives put in place to help the country’s struggling pubs and restaurants are certainly welcome, I think these two may have some issues.
“Pubs and restaurants are usually pretty busy in August and with most people likely to opt for a staycation this year, I am not sure pushing demand over the summer holidays is what’s needed. There is a danger that participating pubs and restaurants will see a huge spike in custom for a month which could mask the real state of the business, causing them to take back staff – encouraged by the £1,000 incentive – who they then cannot afford to keep once the ‘Eat out to help out discount’ is finished.
What the sector really needs is more sustained initiatives that drive demand, not just in August, but throughout the rest of the year, allowing businesses to find their feet without being lulled into a false sense of security by short term measures. What we don’t want to see is businesses taking on staff to cover a busy August, and then have to let them go when they realise that their model is not sustainable, causing further issues for an industry already struggling to know what the new normal looks like.