Coral Rose column: Eat Out to Help no long-term fix
For a week or two at the start of August you could almost believe that the new normal was the same as the old one. The sun shone, the beaches and parks were full, 85,000 pubs and restaurants threw back their doors to dispense 35 million of Chancellor Rishi Sunak’s subsidised meals, and those of us in foodservice distribution finally felt the benefits of the government’s efforts to revive the economy.
In truth, however, it was just a summer holiday, and, like any vacation photos, the snapshots only show the best parts. The foodservice distribution sector is trading 40% down year on year; a couple of ‘old normal’ weeks won’t change that much. The Eat Out to Help Out scheme is a time-limited impetus and those of us who have limped through the months of shutdown did so with the help of the Coronavirus Job Retention Scheme, which is also coming to an end. As the UK goes into its first recession in more than a decade, unemployment bites and consumer confidence falters with the summer sun, the memories of this brief period of respite with fade as fast as a Magaluf tan in October.
ONS figures published in August on the impact of coronavirus on the economy show that hospitality was the sector most severely hit by the pandemic, but we already knew that; many of our customers haven’t re-opened, or are trading on a knife edge of profitability. With just days to go before the scheduled re-opening of schools, we still didn’t know what food provision would be needed or allowed, and the long-term prospect of reduced business in the hospitality sector increases the cost and complexity of serving vital care home, hospital and essential services contracts.
We can see that countries around the world that were ahead of us in responding to the pandemic are now re-introducing lockdown measures, and it would take supreme confidence to expect that we won’t follow them. If this happens, it will be the point where our already-stressed distribution chain starts to break. At the start of the national lockdown, foodservice wholesalers were caught with unsold stock and unpaid credit from their customers. Many are still struggling to move this stock on, while investing in more to meet their customers’ needs. One massive blow to cashflow is survivable, but two would be fatal for some.
We would all like to see Eat Out to Help Out extended through September and the furlough scheme continued for those sectors which need it most. But these are not long-term solutions, and we need direct, sector-specific support for the hundreds of national and regional wholesalers facing an existential threat, or we’ll start to see food supply chains fail. It’s as simple as that.
The chancellor has recognised the importance of hospitality, dairy, fisheries and the arts, and allocated specific funding for those industries. None of those can function without our services, so it’s clear that support needs to be extended.
Some might think I’m painting an overly gloomy picture. Of course many wholesalers are buoyed by the relative uplift in their retail divisions, and some are confident their straight-to-consumer initiatives will become an effective route to market. Last month the EFRA Select Committee, which heard oral evidence from FWD, found that the government could have done more to anticipate the supply chain impacts of its decision to shut down the hospitality sector, and demanded that it publish a plan to support food and drink wholesalers in the aftermath of sudden lockdown. That’s a much-needed step towards clarity and an example of FWD’s relentless hard work in representing the needs of its members.
Those members still need that help. We have long-established family firms struggling to stay open to support care sector contracts. They have brought their teams back from furlough to meet the needs of reopened restaurants, and they are offering the same excellent service to customers that they always have, in the most trying of circumstances.
It would be absolutely heartbreaking if the government does not recognise the value this sector provides, and act to preserve it.Coral Rose Country Range Group Eat Out to Help Out Foodservice FWD Government hospitality Rishi Sunak