The rate on qualifying children’s meals was cut from 20% to 5% from Thursday 25 June to Tuesday 1 September as part of the Government’s Great British Summer Savings initiative, intended to reduce costs for families and increase footfall for hospitality businesses.
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Businesses were expected to pass the saving on to customers, with the Government estimating a full VAT saving of around £2 on a family lunch.
However, operators have told The Morning Advertiser (The MA) the measure made little difference to family trade, with customers showing limited awareness of the cut.
Almond Family Pubs managing director Vicki Almond said the five-strong pubco’s existing promotion, ‘Kids Eat for £2′ from Monday to Saturday, had a bigger impact on trade.
The Manchester-based business saw a 90% uplift in children’s meals over the summer holidays, but Almond attributed much of this to the already established promotion.
Some 60% of kids’ meals sold at Almond Pubs used the Kids Eat for £2 voucher, while children’s meals receiving only the Government’s VAT reduction were down 5% year-on-year.
Almond added the VAT reduction had “very little commercial impact” on the business, with children’s main meals reduced by around £1.06, and prompted no changes to the pubco’s children’s menu or family offer.
Minimal impact
She also questioned public awareness of the scheme: “There was a potential lack of public awareness around the initiative, which could have been better promoted by the Government on socials and television etc.”
In Nottingham, operator of Ye Olde Bridge Inn, Hannah Lloyd, also reported no change in trade attributable to the cut.
“It hasn’t made a difference to trade for us, we are trading as expected for this time of year, obviously the [warmer] weather helped,” she told The MA.
The pub kept its children’s meal prices unchanged and continued existing promotions including after-school clubs and incentives for family diners.
Lloyd said the pub received no enquiries about the VAT reduction, adding the saving would make only a marginal difference to its VAT position and was effectively absorbed by its programme of free family events.
At the Unruly Pig in Bromeswell, Suffolk, chef-owner Dave Wall highlighted the administrative burden created by the additional VAT band.
“It was a right pain administratively having an additional tax band and it has caught the team out on multiple occasions when setting up new items on the Epos system,” he told The MA, adding this had created further work correcting errors on the paperwork.
The pub also did not change its prices on kids meals, having run a promotion the previous year where children ate free during the summer holidays.
Weaker offer
“We would only be drawing negative attention by running a weaker offer than what we ran last year,” Wall said.
Looking ahead, Wall said the business would prefer “meaningful long-term support” through a wider and more permanent VAT reduction, which he argued would allow pubs to lower prices and support family dining.
For Cheshire Cat Pubs & Inns owner Tim Bird, the limited financial benefit was the key issue.
Bird estimated the temporary VAT cut would generate around £1,000 in additional profit across the pubco’s 11-strong estate, concluding it was “never going to be a ‘winning solution’”.
The business made no changes to its pricing or children’s offer, with Bird describing the VAT reduction as “so small.”
“Our customers want quality ahead of price where children are concerned,” Bird continued.
He also called on the Government to support eating out more generally and permanently reduce VAT to 10% for all meals served in the on-trade.
The scheme has now ended, with qualifying children’s meals returning to the standard 20% VAT rate from Wednesday 2 September.
