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What's next for restaurants as Eat Out to Help Out winds down?

·4-min read
Chancellor of the Exchequer Rishi Sunak places an Eat Out to Help Out sticker in the window of a business during a visit to Rothesay on the Isle of Bute, Scotland. (Photo by Jeff J Mitchell/PA Images via Getty Images)
Chancellor Rishi Sunak is facing questions about how he plans to support the restaurant industry when the scheme ends in September. Photo: Jeff J Mitchell/PA Images via Getty Images

As the month-long government Eat Out to Help Out scheme comes to a close at the end of August, there have been increasing calls by businesses and industry leaders for an extension.

The scheme, which is backstopped by the government, gives diners a 50% discount at participating restaurants and pubs on Mondays, Tuesdays and Wednesdays, to a maximum of £10 per head, has thrown a lifeline to many businesses that were forced to close during coronavirus lockdowns.

According to government data released on Tuesday, over 35 million discounted meals have been claimed across the UK in the first two weeks of the scheme.

More than 85,000 eateries have signed up to participate, including high-street chains as well as thousands of small independent businesses. As part of this more than 48,000 claims have been made by participating restaurants so far.

The first two weeks of the dining scheme has seen the number of people eating in restaurants from Monday to Wednesday increase by an average of 27% year-on-year, according to data from OpenTable.

Hospitality has been one of the hardest hit sectors by the COVID-19 pandemic and subsequent lockdown. Around 80% of hospitality firms stopped trading in April, with 1.4 million people in accommodation and food services furloughed, according to the Treasury, the highest of any sector.

And with a second wave of coronavirus cases threatening to break in the coming months, pub and restaurant chiefs are asking for help.

Calls to extend

Some chains have already pledged to continue the scheme into September and fund it themselves regardless of moves by the government, including tapas restaurant Brindisa and steak joint Gaucho.

Alongside this, industry bodies such as UKHospitality have backed calls for an extension. CEO Kate Nicholls said: “The benefit to consumers, the importance to businesses shows the need to continue it for another month to get the remaining 50 percent of restaurants and pubs reopen and successfully trading.”

Sacha Lord, the night time economy advisor in Manchester, chimed in: “Stopping this next week, combined with rents due and the phasing out of furlough will be a combination leading to closure for many restaurants across the UK.”

Pub bosses have also said their businesses will struggle without it as the economy is still on its knees.

Recovery more pronounced in seaside towns

Analysis by think tank the Centre for Cities has found that seaside towns like Bournemouth, Southend, Blackpool, and Brighton have all seen large increases in dining out on Monday to Wednesday so far in August because of the scheme. The increase is not offsetting activity later in the week, meaning overall spending appears to be rising.

Despite a general rise, some of the smallest increases found by the centre were in larger cities such as Manchester, Sheffield, and London. London saw an increase of just 3% in early August, compared to a 23% jump in Bournemouth. The average increase across the UK was 8%.

“What we’re seeing is that small and medium city centres are seeing quite a strong recovery in terms of footfall and in spend, whereas large city centres and central London have not seen that recovery,” Paul Swinney, director of policy and research at the Centre for Cities, told Yahoo Finance UK on Friday.

Swinney said seaside towns were enjoying a particular boost thanks to the rise in staycations.

High street collateral

While the government has been trying to work out a way to protect businesses, many chains have felt the pain of the pandemic.

Sushi and bento chain Wasabi was the latest casualty, announcing last night it would enter a company voluntary agreement (CVA) to help save its business.

Recently, YO! Sushi also said it is preparing to slice hundreds of jobs and close 19 of its sites.

The chain, which has 59 restaurants and 10 concessions across the UK, launched a CVA, which will allow it to shut its loss-making sites.

Pizza Express also announced last week it could close up to 67 of its restaurants and cut up to 1,100 jobs.

In July, Zizi and Ask Italian added to the list, saying they would be closing 75 of their restaurants, risking the loss of up to 1,200 jobs.

Byron Burger also shed 650 jobs and around half of its restaurant footprint.

What’s next?

Rishi Sunak has extended a number of other government schemes and increased government spending as the coronavirus pandemic continues to wreak havoc on the economy.

Whether he will listen to calls in the hospitality sector for more help remains to be seen, as the furlough scheme also winds down and looming job losses threaten.

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