“Britain has decided to distribute public vouchers to all citizens, to support its ailing hospitality industry. Since Canada is struggling with its economic recovery plan, this could be a good place to start. But the scheme itself may have significant downsides.”
We are now $343 billion poorer as a nation because of COVID-19. As a result, our national debt will reach unprecedented levels. While some Canadians will dispute how the government is supporting Canadians and businesses throughout this pandemic, many will argue Ottawa did not have of much a choice. There is certainly some truth to that. Regardless, numbers are massive. But what is most concerning about Ottawa’s approach is the lack of vision for any sort of economic recovery. And the food service industry desperately needs it.
To that end, some countries are starting to launch interesting programs to help the hospitality industry. In Britain, for example, a voucher program called "eat out to help out" was launched to support restaurants, pubs, and other food establishments in the country. It is corporate welfare of course, but COVID-19 is different, very different. Very rarely has one event affected both sides of the economy at the same time. Both supply-side economics and demand have been hard hit due to the pandemic. The British government is spending more than $1 billion on this program over 13 days. It is a lot of money.
The program covers the month of August only, from Mondays to Wednesdays, for a total or 13 days. All registered establishments will offer meals at half price, with a maximum discount of about $15 per person (roughly 10 British pounds), including children. Consumers can use discount vouchers as many times as they want. That is right, you can use these vouchers over consecutive days. Vouchers will not be applicable for takeout and delivery, only for sit-down meals. So, for a family of four, a $100 food bill would be reduced to just $50.
Alcoholic drinks are excluded from the program. Restaurant operators can start to register for the program on the British Government's website starting this coming Monday, July 13. Operators, from fast food to fine dining restaurants, will be able to make claims and be reimbursed directly by the government itself.
Canada could follow Britain’s footsteps, but such an initiative has significant and obvious downsides. For one, the ethics of a government giving money to consumers so they can eat junk food is questionable. Most governments in the Western world have been beating on the health drum for quite some time, including the British government. Supporting fast food chains with public funding seems a little awkward. Not to mention that some of these establishments are part of huge conglomerates. Public funding given to well-resources global franchises is also problematic. On the other hand, the financial viability of many of these establishments is also an issue. Estimates suggest anywhere between 30% to 50% of all restaurants will eventually close within the year due to COVID-19. Public support for establishments which are bound to fail may be ill-timed.
But the hospitality industry is not just about business continuity. It is also about jobs, people, human capital, and communities. Many people in the industry have precarious financial situations and need work, and who they work for matters less. For all of us, we get to congregate, get together and feel somewhat normal again. According to a recent survey, more than half of Canadians still do not want to be close to any restaurant any time soon, which is completely understandable. Many others, however, want to but may not be able to afford it. Such a scheme could make a difference between staying home and contributing to an economy in desperate need of affection.
If implemented, our government should expect something back from operators though. As a start, restaurants benefiting from the program would need to do their part by providing decent wages to employees. A basic income or a substantial universal income subsidy would be more broadly effective, but no such program exists yet.
Menu prices would also need to be adjusted accordingly. Since June, many reports suggest menu prices have gone up, not down. Vouchers could potentially push prices higher since operators would know patrons would only need to cover half the costs. Public programs can motivate consumers to go out, but restaurant operators would need to do their part as well, at least for a while. Since this is about food and people, what is at stake are the program’s moral grounds. Some clarity on expectations for both industry and government is warranted. In the end, all Canadians would pay for this, so it needs to be done right. No such thing as a free lunch.
The bottom line is this: It is high time to get creative about how we will get our economy back to work. Incentivising consumers to go out, safely and participate in our economy to support restaurant operators and entrepreneurs is now more critical than ever. After all, it is food being provided to Canadians, and many of us need the help, and a break from our own kitchen. If only for our mental state.