With inflation at a 30-year high, local businesses are feeling the squeeze as costs soar and households cut spending. Local resident Molly Toomey talks to Ladywell’s high street businesses
Inflation reached a 30-year high of 7 per cent in March, impacting British businesses and consumers alike. Nearly two-thirds of businesses are expected to raise prices in the months ahead, more than at any time since the 1980s.
Heightened costs of raw materials, energy, transport, and goods are hitting businesses hard. Consumers are already reeling from big increases in energy, petrol, and food prices, and rising interest rates and personal taxes.
Ladywell’s growing community of small and local businesses is no exception to this inflation squeeze.
Mamma Dough told Ladywell Live that they will have no choice but to raise prices soon in order to cope. They have faced rising costs of pizza ingredients and alcohol, and in an attempt to stave off raising their pizza prices, recently increased crust size and reduced toppings.
“One thing we won’t compromise is quality, so we need to find other ways to get through this,” said the manager Nicola. She was quick to note that, “We tell customers, if you want the pizza the old way, you just have to ask and we’ll make it for you.”
Adding to the challenge, the pizzeria has experienced a decrease in dine-in eaters, as the cost-of-living increase causes their customers cut back on eating out.
In ordinary times, a typical Friday night would see 2,500 customers served, but these days, Nicola said, “we’re looking at 1,500 if we’re lucky.”
She noted that the business had done better during COVID-19 lockdowns.
“Prices we pay for nearly everything have gone up, but if we increase the prices for our customers, they’re not going to be happy,” she adds.
“We don’t have many good options. We’re doing everything we can to keep the customers happy and stay in business.”
Mamma Dough owners are considering launching a breakfast service with coffee, pastries, and sandwiches to stem the loss of business.
This could help soften the blow, the manager explains, because it could bring more business in the door while requiring only one or two staff on site.
Other big ideas, however, are now on hold indefinitely. Before the inflation crisis, the pizzeria’s owners were planning to invest in a mobile oven for festivals and food markets, and to open another location in Croydon.
Nicola sympathised with customers, saying, “People are worried, so they don’t want to spend money eating out. I understand, we all do.”
Joel of Oscar’s said the big issue for the cafe had been the increase in VAT from 12.5% to 20% from April 1.
“Unless you were making more than 7.5% profit beforehand (which we were not and very few people were) then you are now effectively underwater,” he says.
Oscar’s has increased prices to offset this and the other main prices increases – utilities (up 40% from last year), milk (up 15%) and general food prices (up 5% so far)
Joel says Oscar’s will continue to buy “the best products we can, and support the sustainable supply chain we believe in. But that requires us to increase prices to avoid losing money.
The alternative is to switch to cheaper products to avoid having to increase prices.
“We’re lucky to have a supportive local community and for us the quality is massively important, so we have to hope that our customers support our decision and continue to visit.
“Making a profit at the moment is not on our radar … we’re aiming to just about break even and hope to ride out the worst of the cost increases over the rest of the year.”
Patsy, owner of Ladywell Fruit and Veg, says her profits have been squeezed. She has seen a drop of at least a 10% and is seeking ways to avoid raising prices for customers.
“The way I see it, I want to offer good produce at fair prices, and when I have a problem, I shouldn’t pass it onto my customers. I’d rather find a way to sort this out, or suffer a bit,” she says.
For Patsy, seeking a solution means working overtime to find suppliers offering high quality and reasonable prices.
She’s now spending more time than ever before sourcing her fruit and vegetables – shopping around among markets and wholesalers each week.
Patsy cuts back on certain items when they’re not available at a workable price point. But she does not want to disappoint customers “who come into the shop to find that I do not have something they need and expect.”
In addition to price woes, supply chain issues plague her small business.
“Some things just aren’t available like they used to be. Pink Lady apples used to be my number one seller here, but now I can’t find them anywhere. I’ve checked all the suppliers and went to my usual source many times – and nothing.”
Like Mamma Dough’s manager, Patsy feels compassion toward her customers, “When I do my own shopping, I can see that all the prices have gone up. I don’t want that to be the case when my customers come here. These are tough times for everyone.”
Asked about the inflation’s impact on local businesses, one Ladywell resident said: “I can imagine how rough things are right now, and surely they don’t want to raise prices, but they’re doing what they need to do so they don’t have to sack employees.
“I think we all should keep supporting them, as much as we can. I love the cafes and shops we have locally, we have a nice high street, and to keep that going we have to do our bit as a community during hard times.”