Chips @ No.8 owner Dan Edwards has taken to Facebook to ask customers to stop ordering cod, saying the price of the fish is now so high that he cannot make a profit from it.
Mr Edwards, who runs the Prestwich chippy, broke down the cost: he paid £24 for a kilo on Thursday, October 29 – a total of £144 for a 6kg box. That weight includes parts he cannot use, such as skin, bones and belly meat.
Profit margins squeezed
Once filleted, Mr Edwards can sell the rest for a little less than £228 – an £84 profit. When VAT is taken into account, the profit drops to around £38. That is before staff wages, rent, card machine fees, packaging, gas and electricity, bin collections and the cost of batter and oil are factored in.
To make the required profits, Mr Edwards estimates he would have to hike his prices for cod to more than £20 – something he is not willing to do.
He added: “If you are a die hard cod lover, we’re asking you to at least try haddock, to try coley. Both are fantastic fishes but at a much more attractive price and ones that will allow us to keep trading.”
Industry under pressure
The fish and chip industry has taken a battering in recent years. Sanctions on Russian trade and tighter fishing rules have hit cod prices hard, while the cost of oil has also been impacted by geopolitical tensions. Soaring gas and electricity prices are further causing issues for the energy-heavy industry, and chippies are weathering the same storms as any other businesses as the cost-of-living crisis has led customers to tighten their purse strings.
Speaking to the Local Democracy Reporting Service, Mr Edwards said he is stuck in a Catch-22. He is unwilling to compromise on the quality of his product by buying in cheaper frozen fish and wants to continue to support the British fishing industry by buying Scottish. However, he also does not feel he can pass the costs on to his customers because he recognises that they cannot afford it and this could actually lose him money in the long run.
He said: “We are a habit-formed business, so we have regular customers that come in every week and they order for the family. Once it just gets that bit too expensive, they go ‘right, we can't afford this now, we'll go somewhere else or we'll stay in’ and they never come back because they never come back to review the prices.
“It's a real tight line of surviving, eking enough profit out to survive at home, to pay the mortgage, and keeping customers coming in.”
Balancing quality and customers
He added: “We've got some older clients who are ‘it's cod or nothing’. We are making a loss on it, but I think society needs places like this.
“The older generation need a treat or want a treat, want to remember what they ate all their lives as a working class family, and for us to take cod off the menu we'll drive them away. I'm not prepared to do that.
“What we'll do for other customers who are willing to change, or willing to have a look at something else is say ‘look, we've got haddock, which is slightly cheaper, we've got coley, which is a great fish, we can do that at a much cheaper price for you and make some money off it, but you've got to try it’.”
For Mr Edwards, the survival of the industry could be on the line. He said once all costs are paid, he has around £200 left over each month. To make that meagre return, he works 60 hour weeks and has not been able to take a holiday this year.
He said: “I think we are past that point of where it is no longer financially viable to run a business like this, certainly in the manner that we may be running it [...] The majority of chip shops are just not making any money.
“They're treading water, they're keeping their heads just fractionally above the surface of the water in the hope that it's going to get better or they lose everything.”
Campaign for VAT cut
Mr Edwards is among the business owners backing a national campaign calling for the VAT rate to be reduced from 20pc to 10pc for hospitality businesses. He said he watched last week’s budget with the hope that the campaign would feature.
He added: “[In response to the campaign], Andy Burnham had said he understood and he'd listened, and then there was no reflection of it in the budget. I was sat watching it.
“I was cutting fish, watching it on my phone, waiting for [Chancellor John Healey] to say it, and when we got about two thirds in it became apparent that this wasn't even going to be mentioned, not addressed. What hope is there when there's been such a big campaign and it's acknowledged and everyone knows what the problem is that we've got?”
While the Government did announce some measures for businesses like Chips @ No.8, Mr Edwards said he expects any benefits would be offset by other newly announced measures that will add to his fees. He expects his business would have an around £500 cost reduction from the new Small Business Rates Relief threshold. However, it will spend around £150 of that on raising wages to meet the new minimum wage. New gas price policies are also expected to negatively hit his business, taking another chunk away. Finally, Mr Edwards anticipates some of his suppliers will increase their prices to balance out the extra costs for them.
So, while he said the business rate changes were ‘welcome’, he also feels they ‘don’t scratch the surface’.
Asked if he had a message for the Government, Mr Edwards said: “They are going to have to listen at some point because we are going to lose business after business after business off the high street, independent businesses.
“That the benefits bill is just going to go up because the people will be out of work, and we don't want that burden on society.”
The Treasury said it would not comment on individual tax matters. However, it pointed to comments made by the chancellor since the budget in which he said he wanted to provide ‘breathing space’ for businesses where he can.
Mr Healey said: “It was a budget, if you step back, that was designed to take action where we could just to help take a bit of pressure off people, give people a bit of breathing space, which we’ve done, especially on energy. And it was a budget also designed to try and do that a bit for business.”
