There was much fanfare and promise surrounding the government’s announcement that a voucher scheme for restaurants was to be introduced. “Eat Out to Help Out” will give diners a 50% discount, up to £10 per head, across the month of August. The Chancellor promised that the scheme would protect 2.4 million staff at over 150,000 businesses, and earmarked £400m to be spend on vouchers. However, this one-size-fits-all approach does not necessarily deliver on all of its promises. Smaller independent businesses may struggle to benefit from this voucher scheme.
This week, the registration page went live for businesses to sign up to the scheme. To be eligible, a business must sell food for “immediate on-premises consumption”. But takeaways, pop-up stalls, markets, and food halls may not be eligible because they share outside seating areas, or don’t have any seats at all. So traders at HATCH, GRUB, and open-air markets around Manchester may have to wait and see if they can take part.
Additionally, during lockdown, many small food and drinks business switched to providing takeaway services. While larger chains have mostly struggled to respond to the changing demand, small businesses were able to change their processes quickly. These businesses now face the difficult decision to either resume their in-house service – and to put in place all of the necessary safety measures – or else risk losing out on the voucher scheme.
Small businesses face a further challenge. The voucher scheme only applies on Mondays, Tuesdays and Wednesdays. But lots of smaller, independent businesses close on Mondays and Tuesdays, to give their staff time off after working all weekend. If people are choosing to eat at the bigger chains on those days, small businesses may well lose out as a result of this voucher scheme.
The voucher scheme also only applies to food and non-alcoholic drinks, and not to alcohol. The number of pubs and bars has long been in decline, with 15% lost in the past decade. And 70% those surviving bars do not serve any food, meaning that their ongoing battle for survival will not be getting any easier.
Businesses of all kinds are facing rising costs as they begin to open again. Social distancing rules mean reduced capacity; extra cleaning supplies and safety screens need paying for; employees will be spending more of their time cleaning; and businesses may need to hire more staff so that they can provide table service. All of this puts real financial pressure on independent businesses.
Despite the majority of people being keen to support their local businesses, there have been some major teething issues for restaurants and cafes re-opening. In Manchester, Gusto lost £6,000 in one day when almost 300 diners failed to show up for their bookings. Volta saw several no-shows, as did Kerridge’s Bar and Grill. In fact, an estimated 25% people with online bookings fail to honour them.
In response, a campaign has launched in Manchester using #NOMORENOSHOWS to demonstrate support for the city’s food and drink sector, and to encourage people to show up to their bookings. The campaign has had support from the likes of chef Tom Kerridge, Manchester Confidential, and Sacha Lord, Greater Manchester’s Night Time Economy Adviser. The wider hospitality industry has also been vocal in its support.
In addition to the “Eat Out to Help Out” scheme, the government announced that VAT for food (both eat in and takeaway) will be cut from 20% to 5%. The impact of this has been almost immediate, with chains including Starbucks, Wetherspoons, McDonalds and Nando’s announcing price drops. However, smaller businesses needing to recoup their losses will be looking to keep their prices steady and absorb those savings.
Putting this message across to a bargain-driven public will be a tricky task for our small businesses. Already, chefs and managers are sharing stories of customers ringing ahead to request a discount, even when the business hasn’t offered one. Impatient diners have been leaving poor reviews of places that, perhaps not surprisingly given the circumstances, have offered a less than impeccable service. Perhaps more than discounts and headline-grabbing tax cuts, what our food and drinks businesses really need is goodwill and empathy.
It’s clear that the big winners from both the voucher scheme and the cut in VAT are the large chain restaurants and cafes, while smaller businesses will struggle to compete in the face of rising costs and cut-price competitors. Now, more than ever, we need to continue supporting our local, independent businesses. How? It’s simple.
Show up. Pay your bill. If you can, leave it a tip. You can even re-book, if you feel like it.
Interested in hearing more?Let’s have a conversation