Steve Magnall, director and co-owner of Two Magpies Bakery - which operates seven bakery/cafes, a bake school and a manufacturing unit - explains how increasing costs and a lack of government support is eating into profits
Costs are soaring in all areas - energy, ingredients, packaging and more - and we’re nervous as these increased costs are obviously eating into our profits.
We’ve seen our energy bills rise from anywhere between 127% in one location to 400% in another, while the cost-of-living crisis has pushed up the prices of ingredients and there’s little we can do about it.
Our businesses are energy-dependent and we have high-use sites that require as much electricity in the summer as in the winter, so there’s no respite.
We have taken action to try and mitigate the cost increases, such as reviewing all our products and have stopped producing those that now either break even or make a loss. We have increased prices where we can but are concerned that, as a premium baker, we could also push prices too high and reduce customer spend on the back of it so it’s a balancing act.
One thing we refuse to do under all circumstances is to change our ingredients as they are what make us unique. We only use either the best quality and best local ingredients.
Staffing levels have been kept as tight as possible, but our staff are important to us. Eighty per cent of them are salaried and full time and have families, mortgages or rent to pay so it is also important we support them at this time.
We had hoped the new government and the mini-budget might bring some additional support for struggling businesses, but it hasn’t delivered any benefits.
The National Insurance saving is nothing and the u-turn on corporation tax brings no immediate benefits. A cut to VAT would have made a significant difference, but there’s been no change there.
We feel like we are staring down the barrel of a difficult winter with no financial help from the government. It’s a very difficult time for everyone.
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