The ‘Eat Out to Help Out’ Scheme is an economic recovery measure by the UK government to support hospitality businesses as they reopen after the COVID-19 lockdown in the country. The scheme was announced on July 8 as part of the Plans for Jobs summer economic update.
Features of EOHO
The government would subsidise meals (food and non-alcoholic drinks only) at restaurants by 50 per cent, from Monday to Wednesday every week, all through August. The discount is capped at GBP 10 per head and does not apply to take-away or event catering.
There is no minimum spend and no limit on the number of times customers can avail the offer, since the whole point of the scheme is to encourage a return to dining in restaurants.
EOHO would cost GBP 500 million. However, according to the House of Commons research briefing on the scheme, published on August 20, “the final figure will depend on take up of the scheme and could be higher or lower. If take-up continues at the rate shown over the first two weeks of the Scheme, the cost of the scheme would be around £388 million, less than that forecast.”
Why is it necessary ?
All over the world, the food services sector is one of the worst affected by the pandemic. In the UK, the top two concerns were customers avoiding restaurants for fear of contracting the virus and customers having less disposable income for dining out.
The scheme makes eating out more affordable for consumers directly and helps restore demand.And Restoring consumer demand is being seen as crucial to the UK’s economic recovery.
As of August 16, GBP 18 million had been claimed by registered businesses, with 35 million covers having been served until that date. In an official statement on the data released, Sunak said that this was “equivalent to over half of the UK taking part and supporting local jobs in the hospitality sector”. In an indicator of the scheme’s popularity within the sector, 85,000 individual restaurant premises had registered for the scheme as of August 16, according to the House of Commons research briefing. More meaningfully, the government’s online restaurant finder showed that businesses were registered within five miles of any postal code entered.
Critical remarks
The scheme may have been introduced too early, since it was not yet clear whether the problem was on the demand side, with people being reluctant to go out and eat, or on the supply side, with restaurants unable to serve enough people, thanks to social distancing. The Institute for Government, a governance think tank, deemed the scheme a “deadweight” since it benefits everyone, regardless of income and stated that higher income households would have returned to restaurants anyway
EOHO in India, will it work?
The main problem confronting the restaurant industry, following Unlock 1.0 in June, has been consumer fear, even as the government has remained silent about specific recovery packages aimed at the hospitality industry.
“The war cry for being atma nirbhar has been well-received. Everybody has been told to be self-reliant, everyone has learnt to live with that reality. But I think while the supply side will solve itself, the government will need to work on the demand side. For example, UK’s Chancellor of the Exchequer, Rishi Sunak has come up with this scheme where the government will pay 50 per cent of your bill. That is solving the demand side. They’re not putting money in the hands of restaurants. I think that is something the government will have to do if it wants to save the industry from complete disaster. The question is not ‘if’, the question is ‘when and how’,” Amlani said.
