Espresso: Rory Sutherland - Why We Must STOP Taxing Pubs

0:02I think that's actually an area of such social importance that I've actually proposed that there shouldn't be VAT on pubs. my argument is very simple you don't put VAT on a leisure centre because it's considered a social asset yeah equally any space in which people can fundamentally because a pub is actually a cooperative venture that everybody every time you go to a pub that's why and you're you're also actually interestingly you probably don't tax churches do you so why should you tax pubs okay um uh but but actually every time you you spend money in a pub you're actually funding a space that can be enjoyed by other people at other times.

0:40So it's a form of collaborative consumption, right, spending money in a pub. True, a restaurant as well. But, I mean, there are weird things about British pubs I don't understand. I mean, one of them is, why don't they sell milk, right? Because they're open to an 11-a-truck. If it's a choice, do you want to go to the corner shop or do you want to go to the pub to buy a pint of milk? I'll go to the pub. And once I walk into a pub, I'm going to have a pint, right? That's how my brain works. You know that co-ops should start to sit in our pubs. Well, you could have a little pod system. I mean, a few pub chains have experimented with Amazon lockers, OK?

1:17Really? They're usually in the car park. Yeah. Yeah, and they're obviously experimenting with electric car charging because it's another way of getting footfall. Because I'd basically argue with a pub that it's a footfall problem on the grounds that once people go in, they're going to spend some money. Well, I'd actually disagree with that. OK, go on. I think the reason that people don't go into a lot of pubes is because they don't feel like they're getting looked after when they're there. I see what you mean. And they also think that the actual price they're paying for what they're getting is not worth the value for their leisure time that they have invested.

1:50Got it. And I think that's what the industry needs to concentrate on. Of course, it'd be brilliant if we didn't have to pay VAT. Yeah. Of course. And I think that would be a great thing for the industry and would kickstart it all. but I think that our industry needs to look at caring for people's value for time when they come in and they spend their cash with us and I think there's many many occasions where people will walk into a pub they won't get served beautifully it won't be as clean as it should be the beer might not be quite up to scratch but it's still eight and a half quid that is a pointless exercise I think you're the best one of the best things you've ever taught me Osher is that that whole thing of value for time versus value for money yeah and i think i'd love to explore this with you rory kind of because i think the whole point of today is almost like publicans are behavioral scientists you're like a fucking pint and having a lovely time you're essentially studying bullshit yeah i think a lot of behavioral science is bullshit as well in some sense there's a great measure there's a great measure which nobody actually uses consciously but it's quite revealing, which is sometimes called cost per entertainment hour.

2:58And some people have used it to explain, first of all, why do skint 18-year-olds spend 85 quid on a computer game? Well, the reason is because they play it for about 200 hours. So in terms of cost per hour of entertainment, it's actually very low. One of the things that absolutely horrifies me is middle-class people getting sniffy about working-class people having big televisions, because television in terms of cost per entertainment hour is absolutely tiny. Cinema is quite high, cost per entertainment hour. You're paying, by the time you've gone, it's 30 quid for two hours or something like that.

3:33So it's quite a useful measure because it often explains... You could argue that pubs are somewhere in the middle, I guess. I'd say they're at the high end. They're at the high end, aren't they, really, when you think about it? By the time you actually travel there and you have your three pints and your scotch egg and it's, you know, 30 quid or 40 quid. You know, I think for a couple of hours, that's a huge investment for a normal person. It really is. And I think when they're making that investment, you need to make sure that the experience is way more than the beautiful pint and the really quality.

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