Bag of Chips. Price increase.

newtothis

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But now businesses need to decide whether to pass it on or absorb it.
This is laughable. How do you expect them to absorb it? Write to their landlord and ask for a rent reduction of 5%? Write to their local council and ask for a 5% rate rebate? Their suppliers? What sort of response do you think they'd get to that? The only way they can really reduce anything to absorb it is to is reduce their staff costs. How would you respond to being asked to take a 10% or even 20% pay cut? Or being told, “sorry, you’re now redundant”? Maybe in fantasy land where apparently you can break even selling bags of chips at 15c a go you could use some of your 90+% net margin, but I’m afraid back here in the real world, it’s not an option. As I say laughable: the very people who say “absorb the increase” are probably the very last who would volunteer to take a pay cut or redundancy.
 

Sunny

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This is laughable. How do you expect them to absorb it? Write to their landlord and ask for a rent reduction of 5%? Write to their local council and ask for a 5% rate rebate? Their suppliers? What sort of response do you think they'd get to that? The only way they can really reduce anything to absorb it is to is reduce their staff costs. How would you respond to being asked to take a 10% or even 20% pay cut? Or being told, “sorry, you’re now redundant”? Maybe in fantasy land where apparently you can break even selling bags of chips at 15c a go you could use some of your 90+% net margin, but I’m afraid back here in the real world, it’s not an option. As I say laughable: the very people who say “absorb the increase” are probably the very last who would volunteer to take a pay cut or redundancy.
Why are you getting your knickers in a twist? I never commented on the profits of a bag of chips or 90% margins. I said they can EITHER PASS IT ON or ABSORB it. Some companies are going to absorb the cost. There are many hotels and restaurants that have already said they will. There are others that can't and will pass it on. VAT is only reverting to what it was in 2012 for what was supposed to be a temporary period of time. If restoring the VAT rate leads us to economic disaster like the sector is asking us to believe, then I have real concerns for the fragility of the public finances when it comes to other taxes. I am just back from getting my over priced cup of coffee that has gone up following the VAT. I will probably buy one tomorrow as well. I will more than likely even pay 5.20 that my local is now charging for a pint of Guinness. I will still go for dinner at the weekend where I will just have to suck up the extra 4.50 on my €100 restaurant bill. And I will probably still have a few nights away in overpriced hotels throughout the year. A 4.5% increase doesn't change the spending patterns for the majority of consumers on items like hospitality. A 4.5% decrease didn't lead to a material increase in demand (economic recovery, weak Euro etc etc did more than the VAT rate) and a 4.5% increase won't lead to a material decrease in demand.

If businesses are operating at margins where a reversion to the normal 13.5% VAT is the difference between survival and failure, then there is an issue around the cost of business but that includes rates, staff costs, water costs, insurance costs, health and safety costs.....Have a discussion around that rather than saying a VAT increase of 4.5% will lead to places closing all over place with thousands of job losses...
 

RETIRED2017

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This is laughable. How do you expect them to absorb it? Write to their landlord and ask for a rent reduction of 5%? Write to their local council and ask for a 5% rate rebate? Their suppliers? What sort of response do you think they'd get to that? The only way they can really reduce anything to absorb it is to is reduce their staff costs. How would you respond to being asked to take a 10% or even 20% pay cut? Or being told, “sorry, you’re now redundant”? Maybe in fantasy land where apparently you can break even selling bags of chips at 15c a go you could use some of your 90+% net margin, but I’m afraid back here in the real world, it’s not an option. As I say laughable: the very people who say “absorb the increase” are probably the very last who would volunteer to take a pay cut or redundancy.
My reading of Sunny Post He/She did not say absorb vat increase They just pointed out Business had two choices absorb it or pass it on ,I would expect when the government increase tax on lets say petrol I will see it passed on at the pumps, same with the price increases from there petrol suppliers,
My reading in most cases Chippers absorb the increase in there raw material cost up until now because the big players absorb material cost there now need to increase prices to pass on the tax increase so they passed on the increase in overheads cost at the same time which I think is fair enough,
 

Magpie

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Ha ha, been in the business and many others and not on the fringes like yourself, know all about it and the vast sums that can be made, All about quantity, get them in and get them out although to the couch potato that might seem ungentlemanly in the business world. Look, i've actually given you a very basic outline of a few items and if that doesn't fit in with your take on things then fine. No, I don't drive a Bentley, a Porche or Ferrari, that's not to say I couldn't. Next time you have a bag of chips, think of the small potato that's in there and the €3 you've given for it. Oh yeah, the cost, the cost, the cost of putting it into that bag? I forgot that ;). We differ, big deal.

Vast sums to be made? Do you think every chipper is on O'Connell St with thousands going in and out of them? Most are in small towns and villages and barely breaking even, chippers are closing too. There's very little profit in them altogether.
 

newtothis

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Why are you getting your knickers in a twist? I never commented on the profits of a bag of chips or 90% margins. I said they can EITHER PASS IT ON or ABSORB it.
Fair enough, it was a different poster that implied the 90% margins, based on their statement that they could break even at 15c a bag. My response to your suggestion to absorb it was just to ask "how?".
If businesses are operating at margins where a reversion to the normal 13.5% VAT is the difference between survival and failure, then there is an issue around the cost of business but that includes rates, staff costs, water costs, insurance costs, health and safety costs.....Have a discussion around that rather than saying a VAT increase of 4.5% will lead to places closing all over place with thousands of job losses...
Newsflash: yes, most probably are operating at those margins. I've already said several times that 5% is regarded as a normal net profit for the sector, all things being well. Profits from larger public companies in the sector confirm this as normal (e.g. Caffe Nero last year, revenues of £313m, net profit €17.7m). I never said that places would close all over the place with thousands of job losses (of course industry bodies will exagerate); I said it was questionable if the move would actually increase rather than decrease revenue to the government, which is surely the object of the taxation exercise?
 
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elcato

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with the cost of dining out in particular falling considerably with all sorts of special deals being introduced. The stimulus worked: employment grew in one of the few sectors that had the ability to do so across the country, all at a time of significant recession.
You could say the same about property, any retail, construction etc in the last 5 years. Nothing to do with government stimulus just bring the price in line with demand. The fact the they reduced the vat rate was just a pure fluke.
 

newtothis

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The fact the they reduced the vat rate was just a pure fluke.
In your opinion. It is unknowable. The rate was reduced to achieve a policy objective (increased employment). The objective was realised. Correlation or causation? Impossible to prove. The rate is going up again, with the objective of increasing revenue. It will be interesting to see if that objective is realised (my guess is it is unlikely, at least to the extent hoped for). Regardless of the outcome, it too will be impossible to prove correlation or causation. Maybe the Minister for Finance should just pluck tax rates from the air in attempting to achieve his policy objectives? Maybe he already does. Who knows? It’s all unknowable……
 

Sunny

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In your opinion. It is unknowable. The rate was reduced to achieve a policy objective (increased employment). The objective was realised. Correlation or causation? Impossible to prove. The rate is going up again, with the objective of increasing revenue. It will be interesting to see if that objective is realised (my guess is it is unlikely, at least to the extent hoped for). Regardless of the outcome, it too will be impossible to prove correlation or causation. Maybe the Minister for Finance should just pluck tax rates from the air in attempting to achieve his policy objectives? Maybe he already does. Who knows? It’s all unknowable……
Well that doesn’t make any sense does it? How is he plucking it from thin air? He is simply ending a tax break that was introduced in 2012 and paid for by a levy on private pensions and restoring the rate to what it was in 2012. Not much guess work involved there. The objective is not to increase revenue. It is to stop the cost to the exchequer of the tax break.
 

DB74

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I will more than likely even pay 5.20 that my local is now charging for a pint of Guinness.
VAT on alcohol didn't increase so your local is taking the proverbial if they are claiming that is the reason for an increase in the cost of a pint ;)
 

elacsaplau

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The serious point in all of this is that if you ever bag yourself a bargain in the future, what expression will you be able to use? "Cheap as chips used to be" doesn't really work, does it?
 

RichInSpirit

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My beef with a lot of the chippers is that they are loath to sell you just a bag of chips.
Sometimes you want chips but not anything else with it.
"Do you want anything else?"
 

RETIRED2017

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My beef with a lot of the chippers is that they are loath to sell you just a bag of chips.
Sometimes you want chips but not anything else with it.
"Do you want anything else?"
Sounds a bit fishy to me,;) are you sure you herring them correctly,
 
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odyssey06

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Whatever happened to small and large bags of chips... I think there's a gap in the market for the return of the small bag for 2 euros...
 

newtothis

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Well that doesn’t make any sense does it? How is he plucking it from thin air?
Oh dear, perhaps you should read what I said more carefully? I said maybe he should pluck it from the air as an ironic suggestion of what he should do, given the implication of what you were saying, i.e. the desired result was completely unconnected to the tax reduction. If they are unconnected, why bother make the change in the first place? Why bother with any other adjustment driven by a desire to change behaviour? My statement that maybe he already does was perhaps taking the ironic suggestion a little far: I wasn't being serious.
The objective is not to increase revenue. It is to stop the cost to the exchequer of the tax break.
In what sense are these two statements not simply different ways of saying the same thing? How is increasing revenue not stopping the cost?
 
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newtothis

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My beef with a lot of the chippers is that they are loath to sell you just a bag of chips.
Sometimes you want chips but not anything else with it.
"Do you want anything else?"
I think perhaps you have a chip on your shoulder :). If I was asked that, I'd assume it was just a polite enquiry. Any chippers I go to are happy enough to serve a single.
 

newtothis

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553
The serious point in all of this is that if you ever bag yourself a bargain in the future, what expression will you be able to use? "Cheap as chips used to be" doesn't really work, does it?
I'm not sure that's true. Surely it's all relative? Cheap as chips certainly works as a comparator to the cost of the Bentleys the chippers are all swanning around in........
 

RichInSpirit

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Also had a serious run in with the local Mafia over a bag of chips. They tried to swindle me. Charging me for a large chip box while only supplying a small bag of chips and ringing it up on the till as a small bag of chips. Haven't darkened their door since. This thread is bringing it all back.
 

Bronte

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Thread of the (albeit short) year. A gripe over the cost of a bag of chips has become a full blow argument :D
Which is why I decided to chip in.

I think €3 for a bag of chips is excellent value for money. Save on all the work of making them and don't have your house smelling of cooking oil. Plus you can never make them as good as the industrial friers. And those home ones for frying are a pain to clean..
 
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