“Every £1 you spend at a restaurant 26.6p goes straight back to the government”

MasterChef finalist Tony Rodd, Chef Patron of Copper & Ink, has hit out at the financial challenges threatening UK hospitality.

In a thread on Twitter, Tony shared statistics around restaurant and pub closures warning that we risk losing hospitality to the economy, citing the rate of VAT and additional costs that affect firms.

Revealing how much money is taken from hospitality businesses, Tony said: “For every £1 spent in a restaurant, the government takes around 16.7p in VAT. Obviously, this can be offset against purchases, but as our main purchases in a restaurant are food and drink, there’s actually very little that we buy that we can offset with.”

For a restaurant of our style, staff costs can run at around 45% of turnover.

Of that, around 17.5% is paid as PAYE and employers NI back to the government. That’s 7.9p of every £1 turnover.

Business rates work out at 2% of our annual turnover, so approximately 2p of every £1.

— Tony Rodd (@TonyRoddUK) May 11, 2023

He added: “For a restaurant of our style, staff costs can run at around 45% of turnover. Of that, around 17.5% is paid as PAYE and employers NI back to the government. That’s 7.9p of every £1 turnover. Business rates work out at 2% of our annual turnover, so approximately 2p of every £1. So of every £1 you spend at a restaurant, 26.6p goes straight back to the government. Remember that when you next question the price of a meal at your local eatery.”

Tony’s thread, which has been viewed more 175,000 times in the last 24 hours, comes as The Bank of England raised interest rates by 0.25 percentage points to 4.5% this week, whilst the rate of VAT and business rates still remain unchanged.

Highlighting the impact that the government’s current approach is having on closures, Tony explained that unless businesses are supported, further closures would be inevitable, which in turn would have a knock-on effect for the economy.

“Close a restaurant and the government instantly lose this income, nearly 30p on the pound or for a restaurant of our size, around £390,000,” explained Tony.

Close a restaurant and the government instantly lose this income, nearly 30p on the pound or for a restaurant of our size, around £390,000.

(I recognise every restaurant and pub is different of course)

— Tony Rodd (@TonyRoddUK) May 11, 2023

However, Tony stressed it’s not just restaurants and pubs relying on a reduction of VAT and business rates but the countless businesses that supply and operate alongside them.

Highlighting this Tony wrote: “We have butchers, fishmongers, greengrocers and other food suppliers. There are wine makers, brewers, distillers and drinks producers. Cleaning supplies, kitchen equipment and people to service and clean everything.”

“The network of industries that support a restaurant or pub is huge. All of these companies pay taxes in the form of PAYE, National Insurance, Business Rates, VAT and Corporation Tax. If a restaurant closes, all of these businesses suffer and the knock on effect is massive,” he explained.

As hospitality professionals continue to push and persuade the government to support firms, Tony called on his followers to campaign and press MPs into discussing the issue in Parliament and lobby the government.

In a tweet, Tony said: “Go for dinner, go for lunch, indulge in breakfast out. Order an extra glass of wine or simply treat yourself to the dessert you were considering leaving. Lobby your MP or sign our petition to reduce VAT.”

Go for dinner, go for lunch, indulge in breakfast out. Order an extra glass of wine or simply treat yourself to the dessert you were considering leaving. Lobby your MP or sign our petition to reduce VAT.https://t.co/oMbGYa4rDn

— Tony Rodd (@TonyRoddUK) May 11, 2023