“It has been one thing after another since Covid,” says Mandy Yin as she looks over the accounts for her small north London independent restaurant.
It’s just before lunchtime on a Friday and Sambal Shiok’s chef is busy chopping ingredients for chicken and prawn laksa, the signature dish at the eatery on Holloway Road, a busy thoroughfare not far from Arsenal’s Emirates stadium.
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Fuluke Barca, the head chef at Sambal Shiok, prepares the kitchen and the ingredients for the day’s business; the prawns and chicken for the laksa; the rice noodles are cooked for the vegan laksa.
The 36-seat eatery specialising in laksa, a spicy noodle dish, has benefited from diners heading on to matches at the Premier League football club, as well as locals returning to office work and popping out for lunch again. Sales are back to pre-Covid levels, but that comes after price rises and an extra day of opening as the cost of living crisis and roadworks that block part of the pavement outside have an impact.
“People are coming out less often. Regulars used to come in once a week, now it’s maybe once a month,” Yin says.
Profits are under pressure as costs have risen considerably – on ingredients, pay, rent, energy bills and even legal costs as she is having to apply for visas for some of her staff. Yin now charges £20 for the chicken and prawn laksa, up from £13.80 in 2020.
She says customers question the price rises, but argues she has no choice if the business is going to survive. Sambiol Shiok makes just 80p profit on that signature dish after its exotic ingredients, energy bills and staff costs are taken into account.
Today, £4 – or 20% – of the price diners pay goes straight to the government in VAT after a tax break for hospitality businesses introduced during the pandemic came to an end in April 2022.
The biggest rise in bills, however, comes from energy. Pre-pandemic, the restaurant would pay between £600 and £800 a month on gas and electricity. “Now it can be up to £1,800 and there is not much I can do about it,” says Yin. Rent is also up – by about 10% – but there is relief that the restaurant qualifies for 75% relief on business rates.
Sambal Shiok’s total wage bill has not risen significantly, but that is mainly because the restaurant now employs fewer people as the wage per person has risen by more than 30% in the past few years – as demand for chefs has made it hard to find skilled staff while the legal minimum wage has also stepped up significantly.
There is no more room for cuts, however. The meal is labour-intensive because, for example, Sambal Shiok makes its own laksa paste. “If anyone has tried making it they will realise it has an ingredients list as long as your arm,” says Yin, including two types of chilli, shrimp paste and dried prawns – all fried off 24 hours in advance to let the flavours develop.
Ingredients for the laksa cost between £3.50 and £5, up 30% on 2019. Staff costs are more than £6 a bowl, while rent, energy bills and other administration costs add almost £4.
The broth includes tamarind and lemongrass, which have risen in price, contributing to a more than doubling of the cost of ingredients since 2019. The price of coconut milk, chillis and prawns is up about 50%, while oil has doubled in cost.
While some ingredient prices are now coming down, that will not offset the next increase in wages in April as the government raises the legal minimum hourly wage for those 21 and over to £11.44, a near-10% increase on current rates. “Prices will have to go up again by 10%. If I don’t do that I will go bust and the whole team will lose their jobs,” Yin says.
“It’s a constant balance to try and make it value for money for the customer and not put people off by the price.”
Other costs she did not face in 2019 are also looming. Yin took out a government-backed bounceback loan to help pay her rent during the pandemic. Now the business has to bear a £500 payment every month for the next decade.
With the minimum salary requirement for specialist work visas required by some of her experienced staff who are not UK citizens rising from £26,200 to an unaffordable £38,700 from April, Yin faces a race against time and costs of more than £2,000 for each applicant to become a sponsor and then secure a visa. Workers have to pay thousands more for the right to stay in the UK, including more than £1,000 a year for access to the NHS.
Yin does not pay herself a salary or work directly at the restaurant any more. During the height of Covid she realised she had to diversify her income, getting a book deal and doing writing, some TV and other media work.
She adds: “Pre-Covid I used to think about growing the business. Now my only focus is staying open – survival.”
The surge in costs at Ditto Coffee is marked out clearly on one of its full English breakfast plates.
A year ago you could count on three sausages and three rashers of bacon – now you get two of each. “It used to be gargantuan, and it’s still really big, but we’ve had to make some menu changes,” says Natasha Murphy, the director of the independent chain, which has four outlets in Manchester and Liverpool.
“If something is becoming really an issue or it is not in season then it is out,” says Murphy, sitting in its flagship Ditto Coffee Union outlet in central Manchester near the town hall, which has space inside for 40 diners and 10 more outside.
The coffee shop has benefited from having “a bit of a captive audience” as it makes up the ground floor of an office block that is home to a property company, but it has also been drumming up trade with live music and other special events.
“You have got to have a USP, something that sets you apart,” says Murphy.
She adds that trading was probably tougher last year, and the business is benefiting from more workers in the surrounding buildings heading back into the office more frequently. “The main thing we are up against is the electricity bill. I wonder even if the wholesale price does come down will that translate to us customers? It’s all smoke and mirrors,” she says.
She says the bill for the flagship outlet soared by roughly 150% to about £2,000 a month in two years. “It’s stark when you look at it on paper. We need government intervention. There is a cap for residential [bills] and that’s what I would really welcome to see from the government [for businesses].”
Business rates are another problem. “We got support for rates during lockdown and that did help immensely but it went from all to nothing,” says Murphy. “A lot of independent businesses are closing as they can’t afford it.”
There has also been a battle to afford wages, amid heavy competition for staff which meant one head chef left as the cafe could not afford to match the rate he was offered elsewhere.
The cafe operates with four or five staff and tries to be efficient by, for example, taking orders at the till rather than at tables, but Murphy adds: “We are providing a restaurant quality bunch. We need to have that [many staff] as any less we wouldn’t operate properly.”
She notes that while in 2018 the minimum wage for someone over 21 was £7.83, now it is £11.24 – a 43% rise. With an increase in the wage bill, some ingredients and energy bills, prices have had to go up. However, the chain has responded by making different pricing changes depending on the outlet.
“Generally people have been supportive. If you’re in an affluent area where people have got money to spend they are not going to look at 10p or 20p on the menu, Murphy says.
“It is worse in Liverpool’s Baltic Triangle as our clients there tend to be students and artists and to them that can make a lot of difference.”
