Supermarkets are throwing their low tax rates in the faces of Britain’s pubs by selling cheap Valentine’s Day meal deals, which can cost up to 300% less than similar out-of-home dinners.
Morrisons announced today (9 February) it would sell a Chateaubriand cut of beef for £15, which costs 300% less than if bought and eaten in pubs and restaurants, it claimed.
Other supermarket chains offering cheap three-course Valentine’s Day meal deals with drinks for prices pubs cannot compete with include Marks & Spencer (£20), Waitrose (£20), Asda (£15) and Tesco (£20).
According to chief executive of the Association of Licensed Multiple Retailers (ALMR), Kate Nichols, the sale of cheap Valentine’s Day meal deals by the supermarkets represented the unfair tax advantage retailers have over pubs.
VAT rates drive costs
Fancy steak: Morrisons boasts £15 premium cut
“This is a great example of how current rates of VAT drive up costs in pubs and restaurants,” she told The Morning Advertiser.
“A lot of customers will not realise that – in addition to the preparation, cooking and serving, which all incurs costs – venues are also bearing a tax burden of 20%.”
The promotions were also an example of loss-leading by the supermarkets to generate footfall to recoup costs in other parts of the store, she added.
“Pubs and bars have had to deal with loss-leading prices on alcohol for some time, and licensed hospitality venues – facing a significantly higher tax bill than supermarkets – are unable to compete with these prices.
“The Government needs to look at this tax inequality if it is serious about safeguarding in the hospitality sector,” Nichols said. “Clearly, there is a substantial tax disparity here that needs addressing if pubs and restaurants prosper and grow.”
However, British Beer and Pub Association chief executive Brigid Simmonds pointed out that, while some people may want to stay at home, pubs offered something you can’t buy in a supermarket.
Pubs add 'special ingredient'
She said: “That’s fine if you’re staying in, but millions will enjoy going out on Valentine’s Day, and a great pub meal adds a special ingredient you can’t get in the supermarket.”
On-trade bosses also highlighted a difference in VAT rates as the main reason supermarkets could undercut pubs on prices.
At the time, JD Wetherspoon boss Tim Martin said: “The pub industry has an extraordinary strong moral case for tax equality. This is a classic example of an industry being treated unequally.”
