Huge majority back move to keep hospitality VAT at 12.5 per cent

The British public is overwhelmingly in support of the temporary 12.5 per cent rate of VAT for hospitality being retained.

According to a new poll, nearly 80 per cent are in favour, but the Government seems determined that the rate will return to 20 per cent next month.

Nearly three-quarters (72 per cent) of the public think the Government has a responsibility to ensure that hospitality businesses recover from the impact of the coronavirus pandemic.

The survey by YouGov and commissioned by UKHospitality found:

  • Seventy-nine per cent do not believe that VAT should return to 20 per cent in April.
  • Sixty-seven per cent are cutting back on going out for meals as a result of the cost-of-living crisis.
  • Ninety-two per cent have seen an increase in their cost of living since the pandemic.

The last two items alone present challenges to the industry, but reverting to 20 per cent presents the dilemma of whether to absorb or pass on the increase to customers combined with an increase in the minimum wage and continuing staff shortages.

Hiring and retaining key staff is vital, so businesses will need to look at their costs and how to potentially make savings.

How could businesses mitigate the challenges?

  • Review the workflow through the kitchen. Are we operating in the most efficient way with the right equipment?
  • Look at the supply chain. Can we get better value for money?
  • Streamline the bookkeeping and payroll processes. Are we using the right technology to link with our accountants?
  • Continue with simplified and reduced menus to mitigate challenges around staff shortages and supply chain disruption.
  • Benchmark customer service. Is the opposition doing it better?

Other ways of dealing with the challenges could include improving the environment to make dining a more pleasant experience, offering a warm welcome and being attentive to customer needs.

Other ways to improve the experience could include:

  • Offering free Wi-Fi and ordering apps, pretty something that people expect at venues these days.
  • Offer consistency to customers. A happy customer is more likely to return.
  • Always try to provide something extra like a complimentary drink. Relatively cheap but it leaves a good impression.

The representative study of 1,743 UK adults by YouGov was carried out in February.

UKHospitality CEO Kate Nicholls said: “This research shows that our guests are feeling the pinch and that is hugely concerning for an industry and its workforce that are reliant on discretionary spending.  Extending the existing VAT rate of 12.5 per cent will help hospitality operators to hold down their prices, secure jobs and will help keep a lid on inflation.”

For more information and help on related matters please contact our expert team.