Rising costs challenge independent restaurants' survival

In north London, the independently owned Sambal Shiok laksa bar and café has been forced to increase prices due to skyrocketing expenses for ingredients, staff wages, rent, business rates, and energy bills.

The surge in costs has occurred in the fallout of the COVID-19 pandemic.

Mandy Yin, the owner, battles to keep her business afloat in the face of declining patronage – regular customers have reduced their visits due to economic pressure and disruptive roadworks.

Despite reaching pre-pandemic sales, the profit margin is slim; the popular chicken and prawn laksa now costs £20, up from £13.80, leaving only a profit of 80p per dish after accounting for costs.

End of a temporary VAT tax relief since April 2022 has meant that a fifth of the dish’s price is now funneled to the government. Energy expenses have more than doubled compared to pre-pandemic figures, burdening the business. Although the restaurant benefits from reduced business rates, rent has increased.

The struggle to hire skilled chefs has led to a 30% increase in wages, but headcount reduction has kept the overall wage bill stable. Rising costs for essential ingredients like coconut milk, chillis, prawns, tamarind, and lemongrass have doubled since 2019, with wages expected to rise again due to government-mandated increases.

With ongoing financial commitments like repaying a pandemic-related government loan and visa costs for non-UK staff, Yin has had to diversify her income with a book deal and media work, moving away from a focus on business expansion to simply sustaining the business.

Similarly, Ditto Coffee, an independent chain in Manchester and Liverpool, has adapted by reducing portions and eliminating out-of-season items. With a 150% increase in the electric bill over two years, Natasha Murphy, the director, calls for government intervention similar to the cap provided for residential bills.

Business rates relief has ended, adding to financial pressures. While competition for staff has heightened, wages have risen significantly since 2018, necessitating price adjustments tailored to each location's demographics.

Both establishments illustrate the delicate balance independent restaurants face in maintaining quality, managing costs, and ensuring their culinary offerings remain accessible to customers.