Tim Martin, chairman of Wetherspoon, has recently called on pub and restaurant operators to show their support for a UK-wide Tax Equality Day.
Scheduled for September 13th, Tax Equality Day will highlight the benefit in cutting VAT and has support from the BBPA (British Beer and Pub Association). Wetherspoon’s pubs in the UK will, for that one day only, reduce the price of their food and drink by 7.5%
Currently, VAT adds 20% to food and drink prices in pubs, compared to in supermarkets where the vast majority of lines are VAT free. In fact, according to a quote from Tim Martin himself, pubs pay about 16p in business rates per pint versus 2p for supermarkets.
So is Tax Equality Day something you should be taking part in?
There are two separate arguments here, neither more compelling that the other.
The first involves the financial implications of a 7.5% reduction on all food and drinks. Which side of the coin you fall on this argument pretty much comes down to whether you’re a glass half full or half empty kind of person.
On the face of it, 7.5% is a hefty drop. And not one that everyone can afford. However, in many cases, a 7.5% drop in prices may encourage more sales on that day.
But on the flip side, there’s also a chance that once the prices go back to normal after September 13th, drinkers won’t buy as much because they’ll have experienced much lower prices.
It really does depend on the loyalty of your customers and how you market the event.
The other argument involved in the Tax Equality Day, is whether it will bring about any substantial changes. A cynic will see TED as merely a great bit of publicity for Wetherspoon.
Another detractor might ask what point is being proven, when the government’s recent discussions have been over increasing the price of supermarket alcohol to make large quantities less accessible.
But to be realistic, the cynics and detractors should be listened to. Ulterior motive or not, you don’t want to lose customers to competitors on the 13th September, as you may struggle to get them back.
What is the best way of doing Tax Equality Day?
Assuming that you do decide that TED would be good for your business, there are a couple things that you might want to think about to make the day as successful as possible:
- Marketing: When you’re advertising Tax Equality Day at your club, it’s up to you whether you want to put the emphasis on the fight for supermarket/pub equality, or whether you want to highlight the cheap drinks. Neither is wrong, but if you don’t tell people about TED, it may as well just be a normal day of cheap offers.
- What you do after September 13th: Any positive effects the day might have will be null and void if you don’t capitalise on them afterwards. If a change to rules and regulations is your goal, make sure you join with others who were part of Tax Equality Day to highlight the benefits of the day on the industry as a whole. If sales were your main focus, you might want to consider making a regular thing of it to bring in new customers on a regular basis.
Let us know if your club plans to take part in Tax Equality Day and why, on our Facebook and Twitter pages.
With thanks to Hospitality and Catering News for some of the information within this blog.