VAT reduction

[cachan]

I had dinner at Hibiscus in mid-December and it was still 60 pounds ! Have some restaurants used the VAT reduction to increase their margins ? I also went to other restaurants and they had not decreased their prices by 2.1 % either.

[Basildog]

No, is the short answer.Restaurants are a tough game at the moment, and the VAT reduction had fuck all effect on trade, or spending in general in my opinion.We have rejigged our menus to reflect the current economy(and time of year), but the VAT reduction played no part.And just to add, when the budget puts up spirits/wine/beer i don't rush out and reprint the wine list.

[emsny]

I know that Angela Hartnett's two restaurants (Murano and York and Albany) have indeed passed on the tax cut.

[food1]

You sure about that? Can't see any restaurant in the land cutting prices in line with the huge VAT reduction! Anyone who runs a restaurant knows having to pay VAT is pisstake as food is nearly all 0 VAT rated. A 2.5% VAT reduction means absolutely nothing. A good restaurant costs a fortune to run, its not just a case of what you see on your plate. At the end of the day how much do you expect to pay at the likes of hibiscus etc. Stupid thread.

[cachan]

Hang on a minute food1. This is not a Stupid thread, this is a Discussion thread. If I am not happy about paying a price at a restaurant then I just don't go there, I have a choice, and I chose to pay 60 pounds at Hibiscus and it was a memorable experience and no regrets. Yes, most foods will be zero rated indeed but the menu price still contains a final VAT amount, so the amount a restaurant now receives has still gone up by about 2 percent if the menu price stays the same. That's the logic which you have missed. And the place was not full so I can see that restaurants will suffer business with the credit crunch. This 2 percent extra amount is not going to change the P/L of the restaurant and will not make up for the reduced business, I am happy for the restaurant to receive this extra amount, and I have still gone to restaurants that have not reduced their prices by 2 percent, otherwise I would vote with my feet. It's just a thought that has occurred to me and I've put it up for discussion.

Edited January 22, 2009 by cachan (log)

[Gary Marshall]

well i wouldn't have reduced my prices by 2.5% and i wouldn't expect others to do so, we printed menus daily but re-programming the till was a pain in the arse.

margins are tight enough so it would be a small relief. 2.5% might not sound much but on average a restaurant makes a 10% net profit, so it is actually worth having.

As food1 says much of what a restaurant buys is zero rated for vat so you end up essentially paying 17.5% (or 15%) of your entire turnover to the vat man, which is quite a substantial amount. - and why you should be even more suspicious of cheap food offers when nearly 20% of it is heading straight to the tax man, how little is actually being spent on the ingredients?

[dougal]

Haven't some places just increased the portion size by 2.5% ?