Eat-in or takeaway: how VAT changes what you keep
Why the same £6 sandwich can leave you £6 or £5, and a pricing check to run across both channels.
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What you’ll learn
- The difference between a zero-rated cold takeaway and the same item eaten in
- How to work net revenue back from a VAT-inclusive price
- Why menu price alone does not tell you what a sale is worth
- A five-item pricing check across your eat-in and takeaway channels
About this lesson
Your £6 sandwich isn't really £6.
If you're a restaurant or café owner in the UK, the way a customer buys and consumes that sandwich can change the VAT treatment — and therefore the net revenue your business keeps from the sale.
In this EDC Thursday Masterclass, Ali Solak explains the difference between an eligible cold takeaway sandwich and the same sandwich eaten on the premises.
A £6 eligible cold takeaway can be zero-rated for VAT.
The same £6 sandwich eaten on your premises is standard-rated, meaning the £6 selling price includes VAT.
£6 gross sales
÷ 1.20
= £5 net sales
That's £1 less net revenue from the same £6 customer price.
And that's where the real lesson begins.
Restaurant owners should not look only at menu price.
You need to understand:
- Selling price
- VAT treatment
- Net revenue
- Eat-in vs takeaway economics
- Cost of providing the service
- Ultimately, profit contribution
In this video, you'll learn how to perform a simple menu pricing check across your eat-in and takeaway channels.
Take your five best-selling food items and compare:
Eat-in price
Takeaway price
VAT treatment
Net revenue
You may discover that the same product has very different economics depending on the sales channel.
This is especially relevant for restaurants, cafés, coffee shops, bakeries, delis and other UK hospitality businesses.
Important: VAT treatment depends on the specific food, how it is supplied and where it is consumed. Hot takeaway food and many drinks/products have different VAT treatment, so always check the current HMRC rules for your specific items.
Check the current rules for your own items: HMRC: Catering, takeaway food and VAT (Notice 709/1).