What is the logic behind a coffee shop charging an extra £1 to toast a croissant?

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MathematicianDry5142@reddit

In the UK, hot food is almost always standard-rated for VAT at 20%. This also applies to deliveries and takeaways. By contrast, cold food is usually zero-rated (0% VAT)

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WheresWalldough@reddit

All food is standard-rated for consumption on the premises.

Food that is incidentally hot (i.e. it just came out of the oven and is in fact burning hot, but can be eaten cold) is zero-rated for takeaway.

So a Greggs pastie or steak bake is zero-rated because they don't heat it up, unless you have it to eat in, in which case it's standard.

A toasted anything is by definition hot, so is subject to VAT.

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Tonythepillow@reddit

Do Greggs actually heat it up if you eat in?

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Rextherabbit@reddit

How much was the croissant to start with?

Let’s say it’s £4 - because it’s in a fancy coffee shop. Initially 80p is the VAT that now has to be collected. The other 20p is for energy time etc of carrying out the additional processes.

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LittleSadRufus@reddit

A chunk of it will also be profit, simply because cafés make money on value added services. They don't toast the croissant simply to be helpful.

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FlippingGerman@reddit

That's pretty decent incremental value to be honest.

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StatisticianUsual471@reddit

Its served hot so extra vat and they're using extra energy

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StatisticianUsual471@reddit

Someone to use the toaster and clean the toaster

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grubbygromit@reddit

The T in PAT means test. No need to write test. Yes, I'm that person and I'll never change. Whahahahahah

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Pocket_Aces1@reddit

Good point. I'll head down to the ATM machine and give you some money for explaining that to us

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Tonythepillow@reddit

Hope you haven’t forgotten your PIN Number.

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mattcannon2@reddit

What do you call the examination to be qualified to perform such tests? ;)

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SpudFire@reddit

Fine, somebody to pat the toaster and tell him he's a good boy

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humunculus43@reddit

They probably CBA to do it regularly so tried to set a price people wouldn’t pay

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bsnimunf@reddit

Maybe because it's served hot so incurs a vat charge

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Wretched_Colin@reddit

Still, the unheard price would have to be a fiver to make it an extra £1 in VAT.

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DanielReddit26@reddit

They're probably not far off £5 these days!

Certainly once you add in a couple other margin costs/time then £1 is a safe number to round to.

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Upstairs-Quail5709@reddit

Not really. 50p electricity, 50pish VAT.

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OkPea5819@reddit

50p electricity 😂 I know our bills are high but come on

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st1ckygusset@reddit

Why is this ignorance being upvoted ?

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No-Medicine1230@reddit

Have you seen uncapped business energy rates?

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OkPea5819@reddit

If it was 50p to heat a croissant there wouldn’t be a single restaurant in business.

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No-Medicine1230@reddit

Well yes, obviously 50p is a massive overstatement, but capitalism will do its thing

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Upstairs-Quail5709@reddit

Don't forget the need to do a three page Risk Assesment in triplicate....

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benjm88@reddit

Well a standard toaster is around 1kw and as we know it takes around 2 hours to toast things

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EntirelyRandom1590@reddit

Which is why toasters are traditionally used to male charcoal.

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No_Law_1528@reddit

More like 60p vat, 10p electricity and 30p of labour (1minute of min wage).

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TheSmallestPlap@reddit

50p electricity could run my air conditioner for an hour. I think you need a better tariff.

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DoctorRaulDuke@reddit

well, the high speed toaster ovens they use in Costa etc cost about £10k, so maybe that?

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dom_eden@reddit

Probably to cover the extra staff costs for customers querying why it costs £1 to toast it

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Martinonfire@reddit

Most of the extra cost will be staff time.

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Elegant_Cancel_6937@reddit

Heat, the person heating it and the premises it's being heated in all cost money.

Also, the coffee shop is trying to make money and not charging for something like this would be anathema to that goal.

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TheAireon@reddit

Flabbergasted at these replies saying VAT or cost.

They charge an extra quid because they can.

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There are a few factors. Electricity probably Isn't it if the toaster/grill/oven is on anyway, unless it's a turbo chef. The main thing is the barista, who could be selling something else, cleaning, making product etc. It adds up but the reason it's as high as a pound is literally because they know that people will pay it or just enjoy the croissants cold.

Tax is actually interesting and I don't think it's ever been tried but from my understanding, if you sell and advertise your croissants as cold/ambient temperature but a customer asks you to warm it you still don't have to add vat but if you advertise the product as hot you pay it. I do t know if having an option to pay 1 pound to add toasting keeps it in the non taxable catagory or the toasted version becomes a separate product that would attract vat.

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Gullible-Try-3440@reddit

I had no idea VAT was so complicated. I'm not a lawyer, don't work in hospitality any more, have no experience of this, etc, but my reading of this bit in particular makes it fairly clear cut that VAT is chargeable? I don't think the additional £1 upcharge has any bearing on it.

"Test 2. The food has been heated to order.

This test confirms that the sale of food that has been heated to the customer’s order is standard rated.

Examples of hot food that may be heated to order and are therefore standard-rated include;

Toasted bread, sandwiches, paninis, teacakes and similar items Garlic bread Pizzas Hamburgers Kebabs"

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MTheBarista@reddit

I read that too and to be honest you could be right I'm a barista not a barrister but I would say based on test 5 a panini is at one end of the scale and a ham and cheese sandwich, which is completely intended to be eaten cold but a customer might ask someone to toast it and the staff might oblige and I assume no one would have to report it to hmrc. Every till I've used just has tax attached to the product with no option of recording if it's heated

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Gullible-Try-3440@reddit

Yeah for all practical purposes I don't think it really matters (unless your customer happens to be a HMRC inspector 😂). I'd assume manually adding VAT on in cases like you sandwich example would be difficult if not impossible on most tills.

If HMRC are bothered about potentially missing a couple of pounds in VAT from a coffee shop, they're going after the wrong people.

Wasn't arguing with you by the way, just genuinely find stupid stuff like this interesting

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underwater-sunlight@reddit

Toasting is an additional cost, for the tine taken and the energy used. Worth a quid? Maybe not but you have the option to pay it or to not have it toasted

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paulmclaughlin@reddit

Money can be exchanged for goods and services

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Significant-Fan7218@reddit

Using a severs time.

Look, it's simple, kind of like why a cocktail costs more than a draught beer, which costs more than a bottle.

Preparation takes time from a server who can be serving other people.

It's that simple.

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Master-Trick2850@reddit

food tax is weird like that

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ksw100@reddit

Time for staff, tax, electricity, maintenance of toasting machine.

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DualWheeled@reddit

At it's simplest, it's because the shop exists to make money, and price differentiation allows people to self select how much they will pay.

Some will pay no more than £4 for a croissant, others will pay £5 for the same croissant toasted. If they only had one price they're either alienating a group (by pricing too high) or leaving money on the table (pricing too low.

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No_Law_1528@reddit

60p vat, 10p electricity and 30p of labour (1minute of min wage), seems about right.

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Fu5i0n@reddit

You were the unlucky one. Obviously it doesn’t cost £1 in electric to toast a croissant or bagel, so the Toasting Regulations U.K. was set up to spread the costs and profits equally.

TRUK has an app based till unit that adds £1 to the tenth person that asks for “toasted”.

Voice activation AI, we live in the future

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haggis_catcher-@reddit

Vat as its classed at convenience food

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whatmichaelsays@reddit

Because people value having their croissant warm at least as much as they value £1.

Pricing isn't always down to "cost of goods and service + margin". It's often down to what the customer is prepared to pay, based on what they value.

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marquee-smith@reddit

I work in a place where they charge an extra £4 to toast a banana bread (you also get a little bit of butter at the side)

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jlb8@reddit

I'll take it raw boss

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Left_Mushroom7592@reddit

Because they love money.

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DerrickBobson@reddit

Are you going to pay for it?

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Economy_Fan_8520@reddit

VAT on hot food

And because they can …. if you want it hot you’re not going to walk home to toast it 😅

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Upstairs-Quail5709@reddit

Electricity 🔌

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Willeth@reddit

Energy, tax, staff time, and the fact you want it makes it valuable.

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No_Chemist2922@reddit

Because people do pay for it.

A toasted, warm croissant tastes infinitely better than a stale one. I don't patronise coffee shops or cafes at all, but I'd imagine that if I'm buying a croissant there I would want it served nice and warm, otherwise what's the point?

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WalkerJoggerSprinter@reddit

Leccies expensive these days...

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Timely_Egg_6827@reddit

Time, electricity and I think tax.

Cold food take-away is 0%rated but if it is cooked for you to eat or any food eaten on premises, then it is subject to 20%. So your £3 croisant now costs £3.60.

Greggs get round it by not cooking to order but you can get hot food by asking for last thing out the oven.

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