Has Eat Out helped out?

A qualified succes

With over one in 10 of the UK population taking part and over 84,000 restaurants registered, the government’s innovative ‘Eat out to Help Out’ scheme has been heralded as a big success by the industry.

Launched in the aftermath of the UK lockdown, the scheme was a response to the fact that approximately 80% of companies in the hospitality sector had stopped trading as a result of the coronavirus outbreak, forcing the sector to place around 1.4 million of its workers on furlough – the highest in any industry across Britain.

The latest information suggests that by the 31st August deadline, over 80 million meals were served up, with an average claim of £5 under the scheme and the taxpayer footing a bill of around £400 million, according to the Office for National Statistics.

Despite a clamour from both industry and consumers for the scheme to be extended, the government has confirmed that this will not be the case.

“Part of this popularity is precisely because it is a time-limited scheme,” said a government spokesman, adding: “This reminds and encourages people to safely return to going out.”

Boosting confidence

The scheme was part of a wider package of hospitality support that does stretch beyond August, including cutting VAT to 5%, paying the wages of furloughed staff, business rates relief, and billions of pounds in tax deferrals and loans.

Founder and Chairman of the pub chain JD Wetherspoon, Tim Martin, has described the government scheme as a ‘great boost’ to the hospitality industry. His company – and some other larger operators – have decided to fund discounts themselves, with Wetherspoons offering deals on meals from Monday to Wednesday under its own ‘Stay Out to Help Out’ scheme, which will run until at least November 11.

Supermarket giant Asda has said its cafés will be continuing to discount food throughout September. Rather than giving a discount of 50% off up to £10, however, the chain is offering 25% off everything instead.

Kate Nicholls, Chief Executive of UK Hospitality, the industry body that lobbied so hard for the scheme, is also pleased that it has had the desired effect on consumers, stating that: “Boosting confidence, boosting footfall has been the most significant thing this scheme has done.”

Despite the success of the scheme with consumers there have been implications for those working in the sector. Many understaffed kitchens have been deluged with orders, and front-of-house teams have had to deal with demanding customers, while implementing new safety protocols and adhering to social distancing.

As a consequence, many staff are exhausted and many in the sector are now not opening on Thursdays to address these challenges.

An uncertain autumn ahead

Despite the welcome lift in consumer confidence that Eat out to Help out has driven, businesses will still face the autumn with some trepidation. The removal of the discount incentive and the winding down of the furlough scheme that has covered wage bills will be twin forces that the sector will have to contend with.

Another significant issue for operators will be rents as the next quarter’s bills loom. The rent issue will require honest and constructive dialogue between landlords and operators about how they move forward to protect each other in the coming months.

Together they have lobbied for a government-backed ‘Property Bounceback’ grant scheme to help facilitate in on-going rent negotiations, urging the government to provide 50% of rent and service charges.

Hospitality trade bodies, including the British Property Federation, British Retail Consortium, Revo, UK Active and UK Hospitality, believe that although such a scheme would cost £1.75bn, it would generate £7bn of economic activity, saving 375,000 jobs.

While this would certainly alleviate a growing problem as other schemes taper down, it is not clear yet how much traction this idea is gaining with government.

Adapting to new dining habits

It has certainly been an incredibly challenging year for the hospitality sector.

The state support measures announced in the UK summer economic plan will not resolve the hospitality sector’s long-term challenges, although the support package has certainly revived some demand and temporarily reduced staff costs.

It remains to be seen what the long-term impact will be, but trends such as the growing consumption of restaurant-quality food at home, such as takeaways and deliveries, may well be accelerated.

If, indeed, we are witnessing a structural shift in UK food-consumption habits, operators in the sector will need to respond.

One such model is the emergence of ‘dark kitchens’, also known as virtual kitchens, cloud kitchens, ghost kitchens or delivery-only restaurants. Dark kitchens sell meals exclusively through delivery rather than cooking for eat-in diners.

Coupled with the phenomenal growth of delivery platforms such as Uber Eats and Just Eat, this move could enable food businesses to easily connect with customers and quickly deliver meals to their doorsteps.