Costa and Starbucks to pass on VAT cut to customers as they slash food and drink prices
COSTA COFFEE and Starbucks customers can snap up cheaper drinks and hot food from today as the chains have slashed prices due to a VAT cut.
Costa says it will pass on the full 12.5 per cent VAT saving across its food and drinks, including at its self-service Express machines.
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The changes will, however, only take place in Costa-owned branches. Shops owned by franchisees are encouraged to pass on savings but they don't have to.
Examples of savings can be found in the table above, but it includes 30p (12.5%) off the cost of a Flat White, taking the price from £2.70 to £2.36.
Meanwhile, a salted caramel brownie will fall by 28p (2.4 per cent) from £2.25 to £1.97.
This applies to all food and drink eaten-in, and to all hot takeaway food and drinks.
Cold takeaway food and many cakes and biscuits are currently zero-rated for VAT already.
Which restaurants and hotels will pass on VAT cuts?
HERE are the major businesses that have so far confirmed they'll pass on VAT cuts to consumer:
- Accor Hotels - Ibis, Mercure, Novotel, Sofitel
- Bourne Leisure - Butlin's, Haven, Warner
- Costa Coffee
- Greggs
- KFC
- Marriott
- Nando's
- Park Holidays
- Pret
- Wetherspoons
Costa will reopen seating areas in more than 1,000 stores by the end of July.
Its shops are currently open for a mixture of dine-in, takeaway, self-service and drive-thru orders. To check the status of your local use .
You can also currently get a free £3 to spend at Costa when you use its loyalty app.
Neil Lake, managing director of Costa Coffee, said: “It is important to us that our customers benefit from the VAT reduction not just on selected core coffee products but across all Costa food and drink, both in store and from Costa Express machines."
Starbucks, meanwhile, will cut a flat-rate of 45p off the cost of all coffee-based drinks it serves in company-operated stores, no matter what size is ordered and whether it's for eat in or takeaway.
This includes hot espresso based beverages such as cappuccinos, flat whites and macchiatos, as well as iced drinks that contain an espresso shot such as iced mocha, iced americano and cold foam iced cappuccino.
In some of stores food purchased to be eaten in will also be discounted, including salad bowls, sandwiches and bakery products.
Takeaway food won't be discounted and other Starbucks franchisees don't have to follow suit but it's hoped they'll pass on the 45p coffee saving.
Full list of businesses where VAT will be cut
THE VAT rate will be slashed for the hospitality and tourism industries in order to help them bounce back from the coronavirus crisis.
- Restaurants, cafes and pubs
- Hotels, inns, boarding houses and similar establishments
- Holiday and caravan parks and other holiday accommodation businesses charging fees for tent pitches or camping facilities
- Shows
- Theatres
- Circuses
- Fairs
- Amusement parks
- Concerts
- Museums
- Zoos
- Cinemas
- Exhibitions
- Similar cultural events and facilities
Several Starbucks have now reopened for dining-in, takeaways, drive-thrus and home deliveries. Use to check the status of your local branch.
The Treasury expects people to save £160 on average as a result of VAT cuts but struggling businesses won't be forced to pass on savings to customers.
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KFC, McDonald's and Wetherspoons are among the other high street chains to pass on VAT savings to customers.
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Cuts to VAT come alongside the government's new Eat Out to Help Out scheme, which is offering additional savings of up to £10 a head on meals out during August.
Harvester and Pizza Hut are among the firms to sign up for this separate scheme.