With over 72,000 venues signed up to the Chancellor's initiative designed to get the hospitality sector moving again, I'm sat here wondering whether I'm the only one who's worried about the long-term impact of it's introduction. Some quick thoughts:



✅Many operators I'm speaking to are telling me bookings are very strong for these 1st 3 days of the initiative. I'm being told the same from the city centre well-known branded venues as I am the food-led, out-of-city-centre venues.



❌If you didn't have a strong food trade before this initiative, this isn't a magic-wand that is going to create one for you.



✅I 100% understand that this is about getting the top-line sales moving in a depressed economy, and (what is in effect ) 50% off is a well worn tool to do just that.



❌In my experience however finding an exit route out of using such a deep-discounting promotional mechanic is really difficult:



1️⃣you don't tend to see these new customers at times where you aren't discounting.

2️⃣existing customers will change their habits to visit during your discounted period now which affects margin in the long-term (not wholly applicable to this initiative I know).

3️⃣any new customers tend to not stick around and revert to their previous spending habits/return to their familiar venues.



❔This tends to lead to questions about whether to continue with a labour-intensive, lower margin business model to maintain the top line sales and 'work-out' how to survive on lower GP's, or return to the pre-promotion status quo.



🤷‍♂️I appreciate the times we find ourselves in are new and challenging, and the hope is that by the time this imitative ends the sector will be in a stronger economic position/recovery to off-set this (is anyone confident that this will be the case?), but if it doesn't, where does that leave us ?



🍷I hate to be glass-half-full on this topic, but for some operators I can see this being the dawn of false-hope. I hope I'm wrong.



I'd be really interested to hear others' thoughts and opinions on this, and if you tell me I'm wrong, I'd never have been so happy to be told so!!



Mark



mark@whamconsultancy.com