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.”