Fast food price war as VAT cut

MCDONALD’S, Nando’s and Pret A Manger are among food chains planning price cuts for customers as £4.1billion of VAT cuts come into force.

The Government has slashed VAT on hot meals, accommodation and attractions from 20 per cent to 5 per cent for the next six months.

However, not all hospitality firms are expected to pass the full benefit of the tax cut on to customers, after taking a severe hit from the coronavirus crisis.

Downing Street said “we want businesses to pass on the benefit to customers if they can”, but that it is ultimately the decision for firms themselves.

Bernard Donoghue, director of the Association of Leading Visitor Attractions (Alva), said he expects the cut will go towards helping venues “repair their finances as opposed to being passed on to customers”.

The Treasury estimates households could save £160 a year as a result of the changes.

Last week, Chancellor Rishi Sunak announced the cut, which will remain in force until January 12, alongside plans to give people a 50 per cent discount, up to £10 per head, to eat out in restaurants in Pret A Manger said the price of its coffee was cut from yesterday following the VAT change, with the price of hot food to be cut from tomorrow.

The high street chain said the price of a takeaway latte will fall 35p to £2.40 as a result of the tax break.

Pret is one of a number of under-pressure chains which has announced hundreds of job cuts to mitigate the impact of lockdown on its operations.

In a statement, McDonald’s said it is now recommending a cut in the price of a range of popular items on its menu and meal deals to its franchisees.

It said it intends to reduce the price of Happy Meals by 30p and breakfast meals by 50p, with price cuts also recommended for Big Macs, Quarter Pounders and McNuggets.

Rival KFC said it will reduce the price of sharing buckets by £1 and slash the cost of certain “fan favourites” by 50p.

Nando’s said it will pass on “100 per cent of the benefits” from the tax break to its customers, helping to reduce the price of a quarter chicken by 55p.

‘KFC will slash the cost of fan favourites by 50p’