The last 18 months has been difficult for most sectors; however, one industry that has had to adapt and be more agile than most has been the hospitality sector. Firstly, they had to deal with lengthy periods of lockdown that initially closed many premises completely. Even as the lockdowns eased and the restrictions began to be lifted, restaurants and other hospitality businesses have had to be increasingly innovative to continue to operate.
We have looked at some of the measures that have been taken to support the hospitality sector. In addition, we consider some of the trends that demonstrate the innovation and resilience that can be seen across the sector.
There is some question as to whether last year’s “Eat Out to Help Out” was a help or hinderance to the hospitality trade. Whilst the second spike had many causes, research by the University of Warwick has suggested that 1/6th of case clusters in the Autumn could be attributed to the Government’s scheme.
Another support measure which did not generate the expected benefits for the sector was the VAT rate reduction. Whilst the reduction of the VAT rate to 5% for the hospitality sector was very welcome, businesses had to be trading to take advantage of the relief. Originally planned to run from 15 July 2020 until 12 January 2021, as it became clear that businesses had not been able to take full advantage, the period was initially extended to 31 March 2021.
This was further extended with the 5% due to run until 30 September 2021 when it will rise to a new reduced rate of 12.5% until 31 March 2022. It is hoped that many more businesses will be able to take advantage of this VAT rate reduction
New players to the takeaway market
Prior to the start of the pandemic, food delivery and collection only arrangements were generally the reserve of the local take-aways and national chains in partnership with the big delivery apps, Deliveroo, UberEats or JustEat.
However, in response to the coronavirus pandemic, many existing more traditional food businesses have diversified and adapted their business model. Some established restaurants, pubs, bars and mobile caterers have switched to food delivery, collection-only or selling food online, allowing them to continue to operate during the pandemic. This has covered not only food delivery but also cocktails and other drinks.
This, in turn, has led to the development of apps and websites such as Secret Takeaways which allows customers to order directly from and to support local independent restaurants or GetFed, Glasgow’s catering answer to AirBnB, which allows real home cooked meals to be delivered to customers in under an hour.
Menu boxes and part-prepared meals
Another growing trend prior to lockdown was the increase in the incidence of recipe boxes. Whilst popular pre-pandemic, these generally required a subscription and were for a set number of people; less useful if you are looking to host an impromptu dinner party.
Now, some restaurants are offering these or a half-way-between option, where the customer completely prepares the meal themselves from the ingredients provided. This can have the added advantage of being VAT free as zero-rated food rather than a supply of catering.
Vegan and allergy-free alternatives
The different delivery options and the choice of cuisine on offer has never been greater and this also applies to those that traditionally had a more limited food choice. Now, its even easier to get a vegan meal delivered by the Yoga Kitchen in Milngavie or a gluten free meal at the Three Birds Restaurant in Edinburgh.
So as you sit at home eating your meals; whether they have been prepared at home from a recipe box, ordered from a local independent restaurant via the Secret Takeaways app, or “home cooked” after being delivered part prepared, we hope that you enjoy them knowing that there is probably a VAT adviser somewhere checking whether VAT has been charged at 0%, 5%, 12.5% or 20%!
For further information, or if you have any questions, please contact Alistair Duncan.