VAT cut fails to encourage diners

A VAT cut in restaurants has done nothing to increase customer numbers, new figures have revealed.

The number of people visiting restaurants fell by 1.2% in 2009 according to data by consumer research group NPD, based on a monthly survey of 12,000 French people's eating habits. The amount of money they spent on eating out fell by 1.8% in the same period.

The government cut the rate of VAT on restaurant food from 19.6% to 5.5% last July. To benefit from the cut, restaurant and cafe owners were supposed to sign a contract agreeing to drop the price of at least seven key menu items and improve staff pay and access to training.

Soon after the tax break came into force, consumer groups complained that the restaurants were failing to pass any of the rate cut on to customers in the form of lower prices.

The main restaurant unions signed a deal in December promising to keep their side of the deal or risk losing the €2bn incentive altogether.

The latest research by NPD has also confirmed the growing popularity of fast food in France. Almost three quarters of the restaurant visits recorded in the survey were to fast-food outlets selling sandwiches, kebabs or burgers.

Customers there bought an average of 2.8 products, which NPD said showed the French were comfortable visiting fast-food restaurants for a complete meal and not just for one-off treats.

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