​The “phenomenal” effect of Eat Out to Help Out - but will it be extended?

Gusto MD Matt Snell has described the effect of Eat Out to Help Out as “phenomenal” although he has no plans to continue with his own version of the discount scheme once it ends this week.

“I’ve never really seen anything like it in my career,” he told MCA’s virtual event The Conversation.

“The shape of the working week has changed, so Wednesdays are your Saturday night, Tuesday’s your Friday night and on Monday there’s kind of a second Friday. So it has been a runaway success, there’s no doubt about it.

“There’s been quite a lot of negativity in the press around what it’s done to weekends, and restaurant groups pulling out, but we’ve had nothing but positive experiences and we’ve not seen a huge drop off in sales, if any, over the weekend.

“I know the Telegraph ran an awful headline last week saying 300 businesses had deregistered because staff were being abused, but you always seen an uptake in complaints at very busy times.

“But this has been nothing but positive for the industry as I see it, every single operator I chat to has exactly the same story to tell.

That sentiment was echoed by Red Engine co-founder Steve Moore, who said the response had been “incredible, I think of all the policies the government has done this one has really hit home the strongest, not just for our brand but on Monday Tuesday and Wednesday I’ve never seen queues for every single restaurant.

“I think it looks like the habit [of staying in during the pandemic] has been broken, the confidence levels of consumers are up. So let’s see what happens when it ends, let’s see if these habits stay there, but so far I think it’s been exceptional for us and exceptional for everybody around us.

He also called for the scheme to be extended, saying the government has got it “just right in terms of how much it costs but also the impact. This one’s had a very visible effect in terms of confidence. I think maybe two more weeks would actually help more people engage, once consumers have gone into London or Manchester or Birmingham they realise that a lot of these brands are getting it right. A little bit longer would really help with more people getting into the habit of going out again”.

Snell said he would also like to see the scheme extended but was “slightly more torn on it” because “discounting is like a drug, and it’s very, very difficult to come off it. Once your business starts to rely on that you’re in a very bad place. And so, continuing it potentially just puts off the inevitable. The other thing that you suffer from when you discount on an ongoing basis is guest fatigue, so the guests eventually get bored of discounting.

“I think potentially the government could help by dropping it in strategically. Maybe if it comes out in September and was dropped back in November or for Christmas, I think will be an interesting way for businesses to see if we’ve been able to see any residual effect from EOHO, but also to get a good feel for how businesses are truly trading. Because there are very key trading sessions coming up that everybody’s super nervous about.”

And although they have welcomed the effect of EOHO, neither Snell or Moore would consider their own versions of the scheme.

“What I want to really truly understand is the underlying performance of my business,” said Snell. “Lots of operators will have been in forecast hell for the last 12 weeks. Trying to get a sense of your underlying business is so important, especially in the run up to Christmas which is the scariest four weeks we will have ever had because of social distancing. So trying to understand what’s happening in your business is really important.”

And Moore said it’s “really tricky to unwind discounts. There are brands out there that have discounted for so long that it’s actually nearly impossible to go in there and pay full price and that creates confusion for the customer.

“What we have tried to do for years is get the price right, make it good value, then we can promote something different, like the actual experience.

“I don’t think price is a particular thing for us and our proposition, because we’re good value anyway. I don’t believe price is a driver at the moment, what we’ll lean on more heavily after this is just how safe our experience is.

“Luckily for us we have those semi-private spaces and we’ve had them for five or six years, so we’ve got an ideal proposition for the next year or two that people feel comfortable in, because you and your six friends get your own semi-private spaces and we got tonnes of those in each venue. So for us it’s about promoting that as opposed to price.

As for the question of whether EOHO could be extended, speaking to MCA on the first day of EOHO, UK Hospitality CEO Kate Nicholls was cautious about the possibility, and though she has proposed an extension this week she told MCA she is “still cautious about it because I think the government has always seen it as a quick short, sharp intervention to try and get consumer confidence going.

“From the government’s point of view this has always been less about discount and consumer incentive, and more about giving an explicit permission to the consumer that they can go out, and that it’s safe to do so.

“I think it was a slow burn at the start and it’s really accelerated since, so I am more optimistic than I was because it has been so successful. But I think it really depends on what it is the government is trying to achieve. This scheme was never about getting people back spending again, it was to give them that incentive to get them over the psychological hurdle of going out.

“So I think the government might well look at reintroducing something if it looks like things are slowing down again, or if consumer confidence is weakening.”

Listen on demand to previous instalments of The Conversation here.