Last Sunday, after working all week, my husband and I spent an afternoon in our former bakery that has supplied our two cafés. We were giving the space a final deep clean before it was handed over to new owners. Everything, including the light fittings, the ceiling, every stainless-steel unit, inside and out, were defrosted, moved out, bleached, washed and polished. By the time it was completed, I was exhausted, my hands were destroyed from bleach and covered in cuts. Neither of us had planned to spend Sunday this way. However, schedules changed and the bakery changeover date was moved forwards. As the business owners, the buck stops with us, so that was our unplanned Sunday.
This situation is the norm for cafe and restaurant owners. Something breaks on your day off, no more day off. Someone is sick, no more day off. A delivery doesn’t arrive, well, that’s the end of your plans. There are so many moving parts, there is always something off track. In the 26 months we’ve been open, I don’t think we’ve had a single week go to plan.
In terms of a normal day, the hardest part is multitasking, the mind jumping from fixing a delivery that needs to be sorted, closely watching our cash flow so VAT, wages and invoices all get paid, checking rosters, projecting staffing needs for the coming months, hiring/interviewing, checking prices across suppliers for all stocked items, meeting reps, hearing staff concerns, organising social media and advertising, trying to get a contractor to fix something, making sure our HACCP paperwork is correct, and checking cleaning rosters are up to date. It’s relentless. My lists have lists.
This Sunday, I was saddened to read that Ukiyo is closing, joining about 600 other food establishments that have shuttered in the last 11 months in Ireland. When I lived in Dublin, this place was an institution. However, in the statement announcing their closure, one line is telling: “Unfortunately the margins in our business are now so meagre that there is no future for us and so many more of our fellow businesses.”
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After 20 years, Ukiyo’s owners are not closing because they’ve suddenly gone bankrupt. I imagine it is a similar story for Dylan McGrath and the closure of his two restaurants. The reality is that the meagre business margins compared with the workload and financial responsibilities mean it’s just not worth it.
So where has all the margin gone? The fault lies mostly with the Government. Over the past year, they have implemented policy after policy that have made it feel like death by a thousand cuts, the key ones being the mandatory pension scheme (forthcoming in January 2025), the minimum wage increase (with another to come), the sick leave increases, a new public holiday, and the PRSI contribution rate increase. Worst of all, is the VAT returning to 13.5 per cent while worldwide inflation is already crippling the industry. Yes, these policies seem like good ideas, but all within a year has destroyed the food business’s ability to maintain any sort of margin that makes the work of an entrepreneur worth it.
The reality is the Government will earn many multiples more from my business than I will. Or should I even call myself a business owner? Am I just a civil servant without the perks of a pension?
I suspect there is another culprit that has also been eating up margin. I think it highly unlikely that all the price increases we have endured as a nation, as private consumers and small businesses, are down to true inflation. For example, our cafe got a complaint from a customer about the price we charge for our dairy-free milks. We charge 80c because of how much these milks cost us. A carton of Oatly from our supplier costs us €2.67, which means we don’t get it significantly cheaper than a consumer going into a supermarket. We get four to five cups per carton, about 60c each. We lose money on this milk because by the time wages, electricity, rent, rates, VAT, etc are taken into account, the 80c is a loss-maker. We only make a profit from the shot of black coffee itself.
Another example: it is possible to buy a basic block of Brie in Lidl for €1.50. To buy it from a food wholesaler (I’ve checked our suppliers) would cost well over €3.00 for a comparable block. No doubt, even at €1.50, Lidl are selling their Brie at a reasonable profit, and this shows the reality that large wholesalers have inflated their prices outrageously. As I see it, cafés and restaurants are getting the brunt of the “rip-off Ireland” conversation because they are the consumer-facing business at the end of a long supply chain. I would like to see large food wholesalers that dominate the market investigated to see if their price increases have matched inflation. Investigations in the US showed that 50 per cent of inflation was simply corporations increasing profits.
Furthermore, it appears Irish energy suppliers have tried something similar. From what I understand, they buy their gas/oil up to a year in advance. However, when the war in Ukraine began and crude oil and gas prices skyrocketed, Irish energy companies increased their prices immediately, but this was on gas that had been bought well in advance and at the lower rate. Unsurprisingly, changes in electricity/gas prices by Irish suppliers has not been so swift in reverse.
[ Here’s how the cost of your ‘expensive’ cup of coffee breaks downOpens in new window ]
So that’s where the margin is, mostly with the Government, or with large corporations who have tried to hide their greed under the label of inflation. So why bother opening a food business? Duncan Maguire, the owner of Ukiyo, has urged entrepreneurs who might be tempted not to do so. And, as I glance down at my hands typing and see the cuts from a Sunday spent scrubbing a bakery, ending yet another overworked week with most of the financial reward going to the Government and huge corporations, I wonder if he may be right.
Jamie O’Connell is a writer who, with his husband, John Hallissey, owns Bean & Batch, with locations in Kenmare and Killarney, Co Kerry @beanandbatchkenmare on Instagram
