At my restaurant, an independent Malaysian laksa bar in north London, we have a sharing plate of fried chicken on the menu. It isn’t just any old fried chicken. Instead of wings, we use strips of tender chicken thigh that are marinated in a satay spice paste before being dredged in eggs and a spiced gram-flour coating. It is fried in oil and served with a roasted peanut sauce. It costs £13.
You may think that sounds like a lot and a few customers seem to agree: we’ve been getting reviews in which people complain about our “expensive” prices. I understand the impulse; it’s a difficult time for most people and eating out has become a luxury. But let me break down the total costs of running a restaurant using our fried chicken as an example.
After taking off 20% VAT from the £13, we are left with £10.80, from which we deduct the following:
Chicken and other ingredients: £3
Staffing: £4.50
Rent and business rates: £2
Lights, heating/AC, fryers: £1
That’s a princely 30p profit once everything is factored in.
Why am I telling you this? To make it clear: if you cherish having independent, local restaurants on your high street, instead of endless chains, then it’s time to support us and get the government to act. Because, after the pandemic and now with the inflation crisis, we are facing extinction.
As a recent headline in the trade publication Restaurant magazine put it: “Hospitality faces ‘record insolvencies’ as businesses continue to be battered by a ‘perfect storm’ of cost pressures.” But the picture isn’t the same for everyone. Gordon Ramsay Restaurants was able to triple its turnover in its last financial year (£78.9m in 2022 up from £26.2m in 2021), having taken over sites from struggling rival burger chains, like Byron Burger.
Many big players can afford to be bullish in rent-review negotiations as they are a safer bet for their landlords. They have much easier access to more funding, be it from their shareholders or banks. They have greater buying power over their suppliers and economies of scale, which lead to being able to offer lower prices to their customers. Lower prices mean more customers, which means being able to pay staff more.
And on the other side? We have had two years of fighting landlords, only to be forced to pay full rent; losing staff and having to hire and retrain a brand new team; upwards-only rent reviews and business rates increasing; staff wages being 25% more than pre-Covid; and the perennial problem of labour shortages exacerbated by Brexit.
The negative comments about our prices especially hurt because for the past few years I have only been able to pay myself the minimum salary needed to contribute enough national insurance to get a state pension. I am the lowest paid member of staff, yet have the greatest headache. I would love to be able to pay my staff more, but I am worried that customers will stop coming if we are forced to increase our prices yet again.
Sales at the restaurant may be back to pre-Covid levels, but inflation continues to eat into what little profit there is. Cooking oil now costs £36 for 20 litres, compared with £15 pre-Covid. Basic ingredients such as coconut milk, dried shrimp, chillies and eggs have all increased by at least 30%.
Utilities costs have, of course, skyrocketed. There is no energy price cap for businesses. I took out a bounce-back loan during Covid to survive, and monthly repayments are £1,000. Every quarter there is £12,000 in rent and at least £20,000 in VAT to pay.
Running a restaurant has never been easy, but it has never been this horrible. There is a limit to how much financial and emotional strain independent business owners can take. But most of all, it just isn’t right for my staff’s hard work to be unappreciated and undervalued.
My incredible team do pretty much everything from scratch in house: making nearly 50kg of laksa paste every week, not to mention the curry puffs, fenugreek crackers, sambals and spice pastes. We aim to give our customers the best that we can produce. Making Malaysian food is labour- and ingredient-intensive.
We desperately and urgently need a lifeline from the government. For instance, why are we charging 20% VAT on all sales? In the restaurant industry, there’s little you can claim back on VAT since the ingredients we buy are VAT-free. Cutting that rate, even temporarily, to 10% would mean so much – yet last month the government rebuffed a petition, which has almost 20,000 signatures, asking for exactly this. It is clear that the government believes that Covid is done and everything is back to normal for hospitality. It is not.
In the absence of policy change, all I can say is, please support independent restaurants, cafes, bars, food trucks, producers and grocery shops as much as you can afford to, and be kind while you’re doing so. You’ll miss us when we’re gone.
