According to the Office for National Statistics, based on the Consumer Prices Index (CPI) measure of inflation, the price of fish increased by 14.1% from September 2021 to September 2022. Other vital ingredients for fish and chip shops have seen similar price hikes, with the price of potatoes increasing by 16.1%, margarine or vegetable fat increasing by 25.6%, and olive oil increasing by 26.6% in the same period.
While food prices have increased across the board, fish prices have been hit particularly hard due to the UK government placing an additional 35% tariff on whitefish sourced from Russia. The new tariff began in July 2022, and for fish and chips businesses that import their produce directly, this represented a huge increase in costs for one of their most vital ingredients, as roughly 50% of whitefish consumed in the UK comes from Russia. As such, many businesses have begun to look to Norway and the rest of Scandinavia to source their whitefish and avoid the extra cost associated with Russian produce.
Energy costs for fish and chips businesses can run high, as they generally have many large appliances to run including deep-fat fryers, bain maries, potato chippers, heated food displays, and commercial fridges and freezers. A large amount of energy is required to run large deep-fat fryers and other catering equipment, which makes it more important that the energy is used efficiently - this is ideal for situations where businesses are experiencing a busy period and can cook many orders at once, but can create its own problems during quieter hours when fewer orders need to be prepared. In these cases, it can be very expensive to run the equipment when only a few orders are being prepared. As many fish and chips shops rely on offering freshly cooked produce, it is not always a viable option for businesses to pre-cook items in batches, especially if they may end up being wasted - an extra cost in itself.
Some businesses may have fixed their energy rates for the coming year and so have averted immediate trouble concerning their electricity and gas costs, but those who are still on variable rates could see further struggle in the future. Unlike domestic customers, commercial customers do not have the option to switch energy providers during their contract term.
Fish and chip shops that offer delivery services have also been impacted by the rising costs of petrol, with petrol costs rising by over 30% between August 2021 and August 2022.
On top of the rising spends for fish and chip shops, many takeaway businesses could see a decline in customer numbers over the winter months as the general public make cuts to their non-vital spending. Some businesses have also seen regular customers reduce their order sizes, choosing cheaper options instead.
Some business owners have noted a decrease in footfall in town centres, and have reduced their opening hours as a result. As such, this can have a knock-on effect, reducing the number of sales made per day, and leading to cuts in staff hours and pay.
With costs rising across the board, it’s important to have the right cover in place so you aren’t caught off guard by unexpected vital repair costs or legal fees. It’s also crucial for owners to review your property sums insured – this ensures that your general contents figures reflect new for old values and that stock sums insured are increased to reflect the maximum stock holding you have at any one time, based on the current costs for you to replace the stock. Towergate can offer insurance for eat-in and takeaway fish and chip shops, including cover for deterioration of stock in freezers, giving you peace of mind.
This is a marketing article by Towergate Insurance.
Alison Wild BCom (Hons), MAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has over 20 years' experience as a residential landlord.
Date: November 15, 2022
Category: Commercial Property