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How the UK restarted its restaurant industry: Paying half the bill

For the month of August, the government has been paying for a 50% discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays. It’s a discount that Britons have taken up with relish

August 26, 2020 / 02:20 PM IST
Dining outside in London’s Chinatown, Aug. 21, 2020. For the month of August, the British government has been paying for a 50 percent discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays. (Alexander Ingram/The New York Times)

Dining outside in London’s Chinatown, Aug. 21, 2020. For the month of August, the British government has been paying for a 50 percent discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays. (Alexander Ingram/The New York Times)

Eshe Nelson

When the British government told people they no longer had to stay home, it needed a convincing pitch to get everyone back outside and, crucially, spending money.

The answer: half-price food. For the month of August, the government has been paying for a 50% discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays.

It’s a discount that Britons have taken up with relish.

“Last Wednesday, my God, was pandemonium,” said David Williams, a co-owner of Baltic Market, which houses about a dozen street food and drinks vendors inside a converted 19th-century brewery in Liverpool. “There were more people in the queue than there were inside of the building.”

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In the first three weeks of the Eat Out to Help Out program, 64 million meals — enough for nearly the entire British population of about 67 million — were eaten using the discount, costing the government 336 million pounds ($441 million).

When Rishi Sunak, Britain’s top finance official, announced the discount last month, he described it as “a first-of-its-kind” means of supporting the 1.8 million people working in the hospitality industry. Between April and June, the sector’s economic output plunged 87%. “They need our support, and with this measure we can all eat out to help out,” he said.

On the first day, Aug. 3, food sales rose 100% compared with the previous Monday, according to CGA, a consultancy that tracks data on eating and drinking out in Britain.

“People, and myself included, underestimated the effect it was going to have,” Williams said of the discount, which includes nonalcoholic drinks. “Most restaurants in Liverpool now, you can’t even get a table for the whole of August Monday to Wednesday.”

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Before the national lockdown, Baltic Market was open only Thursdays to Sundays. At the start of August, it opened on Wednesday to take advantage of the discount, and after two weeks the owners decided to open seven days a week for the rest of the month.

The restaurant industry is grateful for the rush of customers, but there are concerns about whether a temporary discount can trigger a sustainable recovery.

The government’s offer, aided by some pleasant weather this August, has encouraged customers to return to restaurants, especially the outdoor seating offered by many establishments. If diners retreat back to their homes once it’s too cold to dine outdoors, however, or unemployment rises as the furlough program ends in October, what then?

“At the moment I’m trying to really enjoy everything about it,” Williams said. “But I just can’t help but feel we’re in a bit of a honeymoon period with it all and that come October, with alfresco dining ending and furlough ending, it’s going to be a very, very different landscape and story.”

Kate Nicholls, the chief executive of UKHospitality, a trade group, added: “People are making hay while the sun shines, and seeing it as an opportunity to build back a degree of resilience” in case the crowds of August thin out in the fall.

On a recent Tuesday evening, the Soho area of central London had taken on a festive atmosphere. Rain held off, and streets were closed to traffic to allow restaurants to put tables outside. Bunting made the socially distanced tables appear more cheerful, and less like a stark reminder of the health risks.

On several streets there wasn’t a single empty table — and they were as noisy as on any pre-pandemic summer evening. It almost disguised the fact that central London is nearly devoid of office workers and tourists, with most theaters and other attractions still shut.

Before the pandemic, “this was the place to be,” said Stani Visciano, the maître d’ at Lina Stores, an Italian restaurant in Soho. On a typical night, a line of customers would already be waiting when the restaurant opened at 5. The pre-theater crowd morphed into the dinner crowd, and anyone without a reservation faced a long wait, he said.

On this Tuesday evening the restaurant was fully booked — and again for Wednesday.

But the revenue isn’t the same. The pre-theater rush has gone. Before social distancing, the restaurant could seat 52 people. Now, fully booked means 40 diners at a time — nearly one-quarter fewer customers.

The British economy fared worse than any other in Europe during the second quarter of the year, because of a longer lockdown period and heavy reliance on consumer spending. To dig itself out of this hole, the country needs people to return to bars and restaurants and cafes and coffee shops in large numbers. The government set aside 500 million pounds for the half-off discount, an amount that economists didn’t consider to be particularly substantive compared with the 190 billion pounds the government intends to spend on the economic recovery from the pandemic.

After spending months warning of the dangers of indoor public spaces, the government now has to persuade people that it’s safe to return to their previous habits. Throughout this crisis, the government has turned to behavioral economists to help devise different parts of its response — and their principles seem to be hard at work in the Eat Out to Help Out program.

“There are two psychological forces at play,” said Ivo Vlaev, a professor of behavioral science at Warwick Business School, who has been advising the government and National Health Service on its communication in response to the pandemic. (He didn’t work on the meal discount plan.)

The first is habit creation, he said. When someone does something and receives a reward, like the half-off discount, the next time the same situation arises, the memory of the reward encourages a repetition of the action — and this continues until the situation alone, even without the reward, can trigger the action.

The government’s dining discount could be particularly effective at getting people out to eat on their lunch breaks, Vlaev said. “It’s a very powerful way to change people by habituating their behavior because they then act on autopilot,” he said.

The second force is known as “psychological commitment,” Vlaev said: In order to get people to agree to a large request, you get them to agree to something small first. People in Britain might agree to take advantage of the restaurant discount, but once they are out and enjoying themselves the government can more easily ask them to return to offices, gyms, theaters and so on.

So far, the experiment is working.

A survey by CGA found that nearly 40% of people using the Eat Out to Help Out discount were dining out for the first time since the national lockdown began in late March — a sign it is winning over people who had gotten used to staying at home. The discount was also encouraging families and older customers to go back out, Nicholls of UKHospitality said. There have been no reports of spikes in coronavirus cases tied to the program.

But even if the customers want to keep coming back, restaurants face a lot of uncertainty.

Half of Britain’s restaurants are still closed, Nicholls said. Across the hospitality industry, businesses that are open are making only about 70% of their pre-pandemic revenue. The government has reduced the VAT, a type of sales tax, on food and nonalcoholic drinks, but this will expire in January. The government also put a moratorium on forfeiture of commercial properties because of unpaid rent for six months, effectively allowing businesses to delay rent payments until the end of September, when the next three months of rent will be due.

That heavy rent debt, building up for over the last six months, is “the single biggest outstanding issue” facing restaurants and the hospitality industry generally, Nicholls said.

And while the Eat Out to Help Out program can help change consumer behavior, it doesn’t address how each establishment will make up for reduced capacity because of social distancing measures, or what will happen when it’s too cold to dine outside. A recent survey by the Office for National Statistics found that just 43% of people felt comfortable eating indoors.

Baltic Market now has a capacity of 150 to 200 people, at best a third of the number of people it could have fit in before. To accommodate more people through the fall and winter, the owners say, they are building heated booths so more people can keep dining outside.

“That’s what the big worry is,” Williams said. “Obviously, we don’t live in California or Dubai, we live in the U.K. So there’s a finite amount of time that you want to eat a bowl of pasta outside.”

c.2020 The New York Times Company

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New York Times
first published: Aug 26, 2020 02:20 pm