What if the State Incentivized Eating Out?

Eating Out

 

By Brian Skinner, Esq.

During the month of August the British government implemented the Eat Out to Help Out program in which the government paid a 50% discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays. Alcohol was not included.

During the first three weeks of the 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 ($441 million). 

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. Between April and June, the economic output of Britain’s restaurant sector plunged 87%. The government set aside £500 million for the half-off discount, an amount that economists didn’t consider to be particularly substantive compared with the £190 billion the government intends to spend on the economic recovery from the pandemic.

The program seems to have worked. On the first day of the program, August 3, food sales rose 100% compared with the previous Monday.  Diners spent up to six times more on Mondays than on weekends, according to the finance app Yolt.  In the week ending August 25, British dining bookings were up 31% annually, compared to +21% in Germany and -49% in the U.S., according to OpenTable.

In the first three weeks of the plan, diners claimed 64 million meals (the population of the UK is 67 million).  The program has been so successful that many restaurants have decided to continue the discount on their own.

Perhaps the governor and legislature should consider using CARES Act funds to duplicate the Eat Out to Help Out program for West Virginia restaurants.   According to the National Restaurant Association, based on data from the Bureau of Labor Statistics & U.S. Census Bureau, 2018, there were approximately 72,500 restaurant and foodservice jobs in West Virginia in 2018 at 3,291 eating and drinking establishments. And restaurants in the state generated an estimated $2.8 billion in sales during 2018. Every dollar spent in the tableservice segment contributes $1.56 to the state economy.

But many industry advocates say that success is more than just numbers, it’s about mindset. The Eat Out to Help Out program lured people out of their homes and got them to start participating in the economy again. In fact, almost 40% of people who used the subsidy said it was the first time they ate out since restaurants reopened, according to a hospitality trade group.

Duplicating the Eat Out to Help Out program may be less controversial than the $10.6 million allocated for small business grants (of $5,000 each) from the $150 million the governor set aside from CARES Act money. And, as summer is winding down, such a program may be especially uplifting to food establishments who are looking forward to cold weather, deferred rent payments, and continued capacity limits.

 

Brian J. Skinner is the former counsel to the West Virginia House of Delegates Committee on the Judiciary and counsel to the West Virginia Senate Minority Caucus. He has over a decade of experience as an adviser to legislators on legal and political issues related to pending legislation; providing research and legal analysis services to legislative committees; and preparing bills, resolutions, amendments, and other documents for the West Virginia Legislature.