Could government-funded coupons help ease the woes of the hospitality industry?


Food vouchers and grants to help restaurants and cafes recover from Covid-19 restrictions have been offered by industry bodies and the opposition. But similar programs implemented abroad have not always gone smoothly, explains Charlotte Muru-Lanning.

It is clear that the hospitality industry is severely affected by the lockdowns and the wider consequences of Covid-19. Auckland hotel businesses saw a 78% drop in revenue from last year, according to Restaurant Association of New Zealand data for September. And the country as a whole is down 56%.

As part of an eight-point “road map” to help the industry, the Restaurant Association of New Zealand is calling for government-funded food vouchers. The proposed program, which would cost the government $ 300 million, would cost around $ 20 to $ 25 for every New Zealand resident over the age of 18.

The National Party called for a similar program as part of its new economic plan, announced earlier this week. The plan, dubbed “Back in Business” would include granting each vaccinated adult a $ 100 voucher to be used in hospitality or tourism locations across the country.

Restaurant Association chief executive Marisa Bidois said companies currently operating under level three restrictions have had a particularly difficult task, but members in level two zones say they are also struggling. “The audience was a little slower to come back,” she says. “There is a little more reluctance to eat in the country.”

The voucher system is designed to counter that reluctance and to help the industry get back on its feet when restaurants can safely reopen, she said.

The association was inspired by similar projects in New South Wales and the United Kingdom.

While the New South Wales program, which started in March this year, has received little criticism so far, the same cannot be said of the UK program.

Called “Eat to Help”, it was implemented in August of last year. During that month, the government offered diners up to 50% off meals Monday through Wednesday. It was designed to jumpstart the economy and get people out of their homes to spend after months of foreclosure.

The program is said to have been popular with businesses and customers. However, research since has suggested the discount system helped spread the virus, and may have contributed to a second wave of infections. Thiemo Fetzer, professor of economics who published the study, said: “The Eat-Out-to-Help-out program, hailed as a cost-effective remedy for the struggling industry, may have made the disease much worse.”

According to research, between 8% and 17% of newly detected Covid-19 clusters were linked to the program during this period. Research found that areas with high voucher usage saw an increase in new infections about a week after onset.

Those same areas saw a drop in new infections a week after the program ended, according to the study.

Although the UK Finance Department rejected the study’s findings, Prime Minister Boris Johnson later admitted it may have had an impact on infection rates.

Bidois says the locally offered program would have significant differences from that in the UK, reducing the risk of similar outbreaks. “We’re in a unique position where we can learn from some of the things that have happened in the UK and say, ‘Okay, well, we know it hasn’t worked and we know it hasn’t. not worked, ”she said.

The first of these differences is that the UK program worked before any vaccine rollout began. New Zealand, as we all know, has started its deployment. Although vaccines do not offer us complete protection against epidemics, especially since children under 12 cannot be vaccinated, it is clear that they reduce transmission and hospitalizations.

Vaccination warrants, mask warrants, and enhanced government leave support programs for staff who are symptomatic or have had potential contact with Covid-19 could all be useful approaches to mitigate this risk for clients and staff, says Marisa.

She adds, “With any change, it needs to be carefully considered so that we can balance reducing the spread of Covid while ensuring that businesses are able to plan and stay operational, as much as possible.”

Another difference, says Bidois, is that “we have quite restrictive measures that are put in place within our companies”. There are restrictions on the spacing between tables and the number of customers that can be in each reception area. “The UK’s measures are certainly not as stringent as New Zealand’s restaurant regulations,” she says.

The Restaurant Association’s program would also not have the closely related schedule that has been built into the UK program. Bidois says they are proposing that the program “be spread over a year” to “limit people descending into hotels within a month”.

In addition to direct financial assistance to businesses, Bidois asserts that the particular advantage of a voucher system is linked to the impact of catering on the market. well-being of customers.

Alert Level Two at Amano Restaurant at Britomart in Auckland in May 2020 (Photo: Fiona Goodall / Getty Images)

While much of the criticism came from the idea that the economic gains of the UK program came at the expense of increasing infections and the strain on their healthcare system, there were also criticisms of the impacts. economic.

The report found no benefit to other businesses from those taking advantage of the program.

In the UK, a large chunk of public funds also went to large restaurant chains. Official figures showed that more than nine out of 10 rebate requests were made by businesses with only one participating outlet, although among them those places claimed only 52% of the total rebate. This means that big chains like Burger King, Mcdonalds and Nando’s received larger sums of money than smaller companies.

Bidois says that even if the chains don’t deserve this help, the association’s plan to create a registry “would ensure that we could also have a good representative sample of companies as part of the plan.”

“We want to make sure that our local cafe down the street is as supported as one of our biggest fast food chains,” she says.

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