Fears for pub trade over VAT hike

Orchid boss Rufus Hall has said a potential VAT rise to 20% would be "really, really bad news" for the trade, while analyst Douglas Jack also fears its impact.

Hall, chief executive of the pub group which runs 289 sites across the UK, was speaking on the BBC's Working Lunch programme this afternoon.

"Speaking on behalf of the pub industry, we will be looking for the new Government to support the pub as a great British institution by curtailing the rise in duty," said Hall.

He also said rumours of a new £10,000 tax threshold would be welcomed by many of Orchid's part-time staff.

Meanwhile Douglas Jack, analyst at Numis Securities, said the new Government was good news for the leisure sector, but added: "The most immediate risk is a VAT increase to 20%. JD Wetherspoon has said it is likely to absorb this; other pub operators are likely to pass the VAT on. Higher VAT would hit the profits from gaming machines across the leisure sector."

Hall on cutting prices​

On the show responding to questions from presenters Declan Curry and Naga Munchetty on cutting prices to attract customers, Hall said: "We do some price-led offers, but not everywhere. Value is not just about price.

"You run the risk, through discounting, of completely changing your customers base."

He said some of his competitors had completely lost loyal customers because of discounting, whereas Orchid tried to "look after our established customers".

Private equity backers​

Hall praised Orchid's private equity backers GI Partners as the "key to establishing this great company", not only through investing more than £50m in pubs, but also by supporting staff and training programmes.

He also revealed that one of the partners at GI acts as a mentor to him. "It's been very helpful, as being a chief executive can be a very lonely place."