Capital

How Governments around the World are trying to Get Customers Back into Restaurants

Eating out is one of the furthest things from some people’s minds right now. The coronavirus pandemic commands our attention be paid to steadying streams of income, affording basic necessities like food and shelter, and taking care of our physical and mental health. For restaurants, this means fewer people are willing to spend their time and money on meals that are not considered essential.

A recent poll released by Navigate360, a full-spectrum safety preparedness and response company, and John Zogby Strategies, a national polling firm, drives this point home. Their poll found that 70 percent of Americans feel safe only at home, with 41 percent saying they feel workplaces and retail shops are less safe than six months ago.

“Going forward, it is clear that creating safe environments and restoring confidence needs to be a priority for all,” JP Guilbault, CEO of Navigate360, said in a statement. “Time and time again, we have seen that it is not enough to hope for the best.”

Governments across the globe have implemented plans and policies to help save their ailing restaurants. Some have subsidized portions of customer tickets while others took a more hands-off approach and let the free market work its magic.

Here’s a brief look at how governments around the world are trying to get customers back into restaurants to revitalize an important part of local economies.

North America

The battle between independent restaurants and the US government is well documented and does not need to be repeated here. What’s worth mentioning is several congresspersons put forth a relief act that would infuse the industry with $120 billion and increase the Paycheck Protection Program to 16 weeks from its current eight. So far the legislation has been inert.

While financial relief will be welcomed by all restaurant owners, industry analysts are bullish on their recovery projections. Research and Markets, a global market research firm, recently projected the US full-service restaurant industry to grow at a combined annual growth rate (CAGR) of 7.6 percent to reach over $345 billion by 2027. This growth will be primarily driven by businesses such as Applebee’s, Denny’s, and Red Lobster, according to a recent report.

Canada’s federal government provided several services for its restaurant business owners, including direct rental assistance payments, wage subsidies, and expanding the Canada Emergency Business Account program, which gives business owners access to an interest-free loan of up to $20,000. As of October 4, the programs are supporting over 3.4 million Canadian jobs and have paid out over $41 billion in subsidies, according to a press release.

Unfortunately, Canada’s restaurant industry has struggled to survive, even with the stimulus. Restaurants Canada, the country’s largest restaurant advocacy group, estimates the foodservice industry is significantly lagging other industries in recovery.

However, analysts also expect Canada’s restaurant industry to grow at a CAGR of 4.6 percent over the next seven years, primarily led by quick-service concepts like Boston Pizza.

Europe

Home to several cities ranked highest in the world in restaurants per capita, Europe was particularly devastated once COVID reached its shores. The restaurant industry itself suffered a 79 percent decrease in sales as a result of the pandemic, according to a report by the EU.

The UK government-subsidized up 50 percent of a customer’s meal for its “Eat Out to Help Out” campaign. Over £500 million was spent during the campaign, but business owners reported it didn’t help bring restaurants back to their businesses. 66 percent said they saw minuscule increases in bookings because of the campaign.

Italy was one of the first European countries to shut their restaurants down completely due to the pandemic. Food and Wine reported at the time that many Italian business owners protested, saying the lockdowns would cause serious harm and force the government to provide subsidies. In response, the government provided tax deferrals for business owners but did not directly subsidize restaurant operations.

Instead, the Italian government provided subsidies to the tourism and transportation industries, both of which support its restaurant industry. Still, some of the country’s biggest tourist attractions like the annual wine tour known as Vintaly were forced to postpone or cancel their events.

Mordor Intelligence, a global data analytics firm, expects the Italian restaurant industry to grow at a much slower rate than the US, Canada, and the UK, at 1.24 percent between 2020 and 2025. Growth will be primarily driven by bars, cafés, and quick-service concepts like Gruppo Sebeto.

Asia

Japan enacted its “Go To Eat” program in October to promote consumer spending and help heal its ailing restaurant industry. Under the program, restaurant patrons who make reservations through websites such as Tabelog and Gurunavi earn points that go toward future meals. Users earn points equal to the value of their meal. For example, if a patron orders a 500 yen meal, they receive 50 yen in points. This resulted in the government purchasing every other meal sold by restaurants.

While this measure may seem drastic, it’s important to consider how important restaurants are to Japan’s economy. Agriculture makes up 21 percent of the country’s GDP, representing approximately one trillion dollars. Restaurants A recent report by Tokyo Weekender found “Japan’s restaurant industry’s bankruptcies jumped 13.2% from last year totaling around 583 throughout the country for the period between January and August.” Sales dipped 17 percent between March and April,

A recent industry report found “The foodservice industry has seen relatively strong growth, especially in the takeaway segment. However, the rapidly aging and shrinking population will negatively affect future overall growth in the industry.” Similarly, Japan’s restaurant industry is expected to grow at a CAGR of 2.6 percent by 2027, according to a report by Research and Markets.

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