We spent the day with the Michelin-starred chef as he spoke to Manchester business owners. And he had a clear message for the new Prime Minister…
Last week, Michelin-starred chef and presenter Tom Kerridge brought his VAT’s The Problem campaign to Manchester, calling for a reduction in VAT paid by the hospitality industry, as businesses across the UK continue to face rising costs and increasingly narrow profit margins.
He was joined at the launch event at Bar Shrimp by UKHospitality CEO Allen Simpson and Sacha Lord, Chair of the Night Time Industries Association and co-founder of Parklife and The Warehouse Project.
Together they’re hoping to build support among businesses, restaurant-goers and government for hospitality VAT to be brought more closely in line with rates elsewhere in Europe – where the UK’s rate is currently highest; 20% compared to 10% in France, Italy and Spain, 7% in Germany and 6% in Portugal.
We thought we’d do what we do best, and take Tom to visit some of our favourite small business owners to talk about the challenges affecting the industry, and what a reduction to 10% VAT would mean for them in real terms.
“The only way a restaurant ever makes money is what it charges you for a plate of food or a glass of something to drink, and that is the only way that revenue comes into that business,” said Kerridge.
He explained that increases in National Insurance, minimum wage, utility bills and food inflation have arrived at the same time as customers have less disposable income, leaving operators unable to simply pass every additional cost onto diners.
At Winsome, the fine dining restaurant on Princess Street, chef-patron Shaun Moffat told Kerridge that the restaurant had experienced a difficult first 18 months despite maintaining a steady flow of customers.
“We’re still here, we’re not losing. But we’re not winning,” Moffat said.
Moffat explained that prices at the restaurant had risen by around 25% since opening as costs increased, but said there was a limit to what could reasonably be passed on.
The chef used one of Winsome’s duck dishes to illustrate the margins involved. “We are, I think we’re clearing £2.50 out of a £45 dish, roughly, which is 6%,” he said. That means a total of about £2.50 profit on the dish.
“VAT is getting more than the farmer is out of me for this,” he added.
Kerridge also visited one of Manchester’s longest-standing pubs, the Circus Tavern, where landlord Barry Hayes has been behind the bar since taking over in 2010.
Customer habits changing since the pandemic have made things difficult for Hayes, who relies heavily on daytime trade.
Alongside reduced footfall, Hayes said electricity costs had increased significantly after a four-year energy contract agreed around the pandemic came to an end.
“But you know, I just think more than anything they need more people coming in through the door.”
The final stop saw Kerridge speak to Polly Chan at Lottie’s Bakehouse, a bakery in Chinatown specialising in sweet and savoury delights. At Lotties’, VAT applies to food and drink depending on whether customers eat in or take away can make the additional cost particularly visible. Customers can be surprised by the difference and that the business has little room to increase prices further.
Kerridge said Manchester demonstrates the wider role hospitality can play in the growth of a city. Unlike our counterparts in Europe, we don’t aways take the industry very seriously, but he made the case that restaurants, bars, pubs, hotels and music venues help create neighbourhoods where people want to live, and businesses want to invest.
And his message to the new Prime Minister Andy Burnham, who has put this city in the centre of the political conversation in recent months: “Let hospitality thrive and you’ll see everything else grow with it.”
Read More:
Mood II Swing to play rooftop food festival Live From The Grill
Where kids eat free in Manchester this summer
Bolton Food and Drink Festival returns lead by Marco Pierre White