Soaring prices and VAT pressures are impacting even the most premium chippies in London. Co-owner of the award-winning Mayfair Chippy, Jamie Jones, said he is unsure what will happen in six months' time due to several mounting financial burdens.
Not only has fish quadrupled in price in two years, but gas and electricity prices have “gone through the roof”, the minimum wage has increased every April since they opened - now £12.71 for those 21 and older - and Rachel Reeves made employers contribute more National Insurance from April 2025, up from 13.5% to 15%.
Profits squeezed despite full restaurants
“It's making it considerably, considerably difficult to run these venues,” said Jamie. “People say to me all the time, 'your restaurant’s full, what a nice problem to have'. And I think yes it is, but what's actually left, the profits at the end of it, are nothing like they were even two to three years ago. It still continues to affect the bottom line with all the costs stacking up. It’s very, very difficult out there.”
The restaurant bosses now pay 81% more for haddock than in 2024, nearly a third more for chips, and their oil price has gone up by 22%. So far, the restaurant says it has absorbed these costs for about six months, and Jamie said if they didn't charge £27.25 for fish and chips in the luxury postcode, they would have to shut immediately.
VAT is a 'killer'
He believes reducing VAT and national insurance would help "dramatically". He added: “I think it's a big killer at this moment in time. I think that 10% reduction, you're actually able to bring that down through to the bottom line.”
Restaurateurs are calling on the Government to reduce VAT from 20% to 10%, because they cannot claim back VAT on the majority of their ingredients, which often results in them paying higher duties than other industries. Plus, supermarkets pay 0% tax on cold food that can be heated at home, making for stiff competition. The average rate in Europe is around 12%.
The Mayfair Chippy is not yet at the point of closure, but Jamie stressed “God only knows where we'll be in six months time” if costs continue to increase or VAT isn't brought down to 10%.
Hake is a 'fantastic alternative' to cod
One factor the chippy can control is the menu. Nine months ago, the bosses boldly chose to replace cod with hake, which is cheaper and more sustainable due to supply issues. Jamie said it used to be seen as a premium product. “Now it obviously has gone down the opposite scale of the market, but we're still using it. We love it and we think it's a great alternative.”
“It is a beautiful white fish, very, very delicate flavour and it fries exceptionally well. When we sold it and put the reasoning behind why we were doing it, they [the customers] understood.”
“It doesn't look like cod's going to come back to us too quickly because it's just been completely priced out. I think a lot of people need to be more mindful and open to using these more sustainable products.”
Even though hake helps ease cost pressures, demand is pushing up the price, so VAT remains the key sticking point. To show how lower VAT could positively impact trade, the Mayfair Chippy is slashing its Knightsbridge eat-in menu by 10% on Tuesdays for the rest of the month.
He and his business partners, Peter Taylor and George Hammer, already lost a site in Clapham and the City of London during Covid, despite becoming a "success overnight" when they revamped the struggling Great British restaurant to the Mayfair Chippy 11 years ago, with tourists eager to try the traditional dish.
Even though he loves the industry, Jamie would "definitely" rethink opening a restaurant today, reflecting a feeling of despair across hospitality. He explained: “I think unless you are churning out a thousand plus covers a day, it's going to be difficult for you to make ends meet. London restaurants are closing as we speak. Fish and chip shops are closing.”
They remain dogged in their determination, with hopes to open a third London restaurant and a spot in Saudi Arabia. “Every day we get up and strive to keep the doors open, keep our teams happy, keep the clients happy and to just offer really good British fare.”
