Under the $3 trillion Heroes Act in the US, the second round of stimulus checks ($1,200 per person, including children, and up to $6,000 per household) were issued to low and middle-income citizens in the third week of April for consumer spending. Several businesses have confirmed an increase in sales to the point that some were already up year over year.
The National Restaurant Association says that the US food industry will lose $225 billion, far from its initial estimated gain of $899 billion in sales, accounting for roughly four percent of the US GDP. With the pandemic hitting the food industry and the whole economy since March, stimulus checks can give a major boost to production and distribution as well as cover daily expenses, especially those of the over 36 million jobless Americans.
For US fast food chain Raising Cane’s CEO Todd Graves, the best way for restaurants to capitalize on stimulus checks is to be aggressive in letting consumers know that they are fully operational. It’s an “immediate adrenaline shot” to consumer spending as per restaurant chain analyst John Gordon.
In the Philippines, restaurants and small businesses alike are struggling to keep their employees despite the significant loss caused by the cancellation of dine-in operations. The government recently granted P5,000 to P8,000 to over 2.6 million small business employees under the Small Business Wage Subsidy (SBWS) program. Those who have already received funding from the COVID-19 Adjustment Measures Program (CAMP), which ran from Mar. 23 to Apr. 15, will receive a deduction.
Despite rent waivers, loan programs (which could probably benefit businesses better if it were grants) and other forms of financial assistance, the Philippine economy still declined significantly. Consumer spending is the Philippines’ key economic driver and so the industry continues to seek ways through which it can go back to operations (with slight modifications such as takeout and delivery services only).
With the Social Amelioration Program (SAP), among others, targeting 18 million of the poorest families in the country, it is highly unlikely that the beneficiaries will turn to restaurants for their daily necessities. The middle class, which make up 40 percent of all Philippine households, also expresses their sentiments on being excluded from most of the government’s programs.
Cabinet Secretary Karlo Nograles said that the middle-income workers are already included in the SBWS program, which Finance Secretary Carlos Dominguez countered. Dominguez said that those belonging in the middle class are already benefiting from loan moratorium, payment extensions and interest-free debts.
There is yet to be an improvement in terms of how consumer spending is contributing to the current economic state of the country. Given that government assistance programs are directed to low and middle-income classes, it is likely that the majority will opt to spend their stimulus checks on more attainable essential channels, which might not include restaurant systems.
As the industry slowly eases its way into the new normal, relying on contactless operations for instance, what is needed more than just the demand for goods and services is the means for spending—which won’t be achieved unless the low and middle-income workers achieve sufficient financial capability through government subsidy.
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