Majority of pubs and restaurants won't pass on VAT cut, says leaders poll

By BigHospitality

- Last updated on GMT

Majority of pubs and restaurants won't pass on VAT cut, says leaders poll

Related tags: QSR, Restaurant, Public house, Casual dining, Vat

The majority of pubs and restaurants say they intend to use the Chancellor’s reduction in VAT from 20% to 5% to help their struggling finances rather than pass on price cuts to customers.

When asked, 85% of respondents to the latest weekly Hospitality Leaders Poll by MCA/HIM said they would not be passing the VAT reduction on to customers, with only 5% saying that they would pass on the full 15% reduction. A further 10% of businesses said they were planning to introduce only a partial reduction.

The decision by many business owners is at odds with those of the large high street hospitality groups, including Pret,Starbucks, Nando’s, KFC Pret and JD Wetherspoon, which have all announced price cuts in line with the VAT reduction.

Of the 265 respondents, many said that as wet-led operations it wasn’t worth the trouble, with one saying: “It’s too complicated and our food trade is only around 20% of total turnover”.

An operator of a popular high street food-to-go chain that will not be passing on any price cuts said: “We need all the help we can get right now”.

Earlier this month some independent restaurants voiced their concerns that the VAT cuts ​by some of the large industry players was putting pressure on smaller operators to follow suit.

Elite Bistro’s Gary Usher said his business would not making a VAT reduction. “If you want a deal, with the greatest of respect go to McDonald’s. An independent doing deals, VAT reduction or not, won’t survive.”

On the topic on no shows, only 16% of hospitality operators asked intend on introducing deposits to secure bookings despite people not honouring bookings being more problematic than ever before because of the reduced number of covers they can do at any one time. However, many respondents said they were keeping the situation under review.

The weekly poll’s tracker question, which monitors confidence for the future among the hospitality industry, showed a very slight decline from last week, from 68% to 66%.

Related topics: Trends & Reports, Casual Dining

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