‘Eat out to help out’ has not boosted the hospitality sectors finances

New findings from The British Chambers of Commerce’s quarterly economic survey indicate that the “eat out to help out” scheme, which ran throughout August and offered discounts on meals in pubs, restaurants and cafes, had a fairly marginal impact on the sector as a whole. The survey, which questioned 6,410 companies employing 580,000 staff, found that 66% of respondents in hospitality and catering reported a fall in sales and bookings between June and the end of September.

For the hospitality sector, returning to normal is bound to be a long process, but with the right support, it is an industry that will be vital to the future growth of the economy, employing 1.6million people.

Private equity investment has been one of the only areas able or willing to provide growth finance to businesses in this arena, who are looking to grow during lockdown. It is also a sector that has provided vital survival finance to firms unable to access any government support as many pubs were.

Luke Davis, Chief Executive of SME investment firm IW Capital, believes a lot more needs to be done to help the hospitality industry to survive.

“Gimmicky schemes like ‘Eat out to help out’ will not help create longevity in the hospitality industry. The sad truth is that in the hospitality sector, many businesses rely on packed spaces to make the most of custom. While the scheme may have helped to increase the number of bookings and footfall during the month of August, the rise of COVID-19 cases since then means that people are once again nervous to go out and dine.

A real quick win and something that would give longevity to the sector would be to encourage investment, and allow hospitality businesses to qualify for EIS. To bring the sector back to life, it’s going to need a lot of investment. The government isn’t going to be able to stop the rot. You do need people to come along and buy up these assets, people who are willing to take the risk.”

The EIS is a government scheme that offers tax reliefs to individual investors who buy new shares in companies that qualify, but changes to the legislation in March 2018 mean that it is no longer applicable to the hospitality industry at large.