Many businesses survived the pandemic, grants were available to small business and coupled with small business rate relief, that continues. Just when we thought things were getting better, we have war in Europe, soaring energy costs and a cost of living crisis in the bargain.
We should all spare a thought for our local fish and chip shop. For many families fish and chips on a Friday or a Saturday night are just part of ‘normal’ life. That much loved ‘ British’ institution is now under serious threat. It is reported that according to insolvency Company Debt, that about one third are at risk of having to close their doors.. Contrary to what is popular belief, the industry has apparently always works on tight margins. With basic costs of fish and sunflower oil having jumped between 60-70% in the last year, aside of soaring energy costs, many will struggle to survive this current wave of price increases. There is a general reluctance in the industry to pass on these costs to the consumer when budgets are already stretched. It is thought that the cost of a portion of cod and chips could rise to £10 by the end of 2022. It has always been perceived that catering premises run with high profit margins and with the cost basic commodities increasing that is no longer the case.
Fish and chip shops will not be the only small business to be under pressure right now with many consumers looking very closely at where they spend their disposable income. As a result of this we are likely to see a levelling off in the rental growth in the retail sector which has been enjoyed by many landlords over the past few years. Whilst our High Streets have already seen a decrease in rental levels in some areas that has not been the case for secondary retail premises , at present we continue to see demand outstripping supply. We may well see some of the heady rent rises, seen over the past few years pulling back, if landlords are to retain continuity of income from their business premises . However, at the time of writing this article we, as letting agents, continue to experience strong demand for retail premises in good locations. Demand continues to outstrip supply for retail premises along with all the other sectors of the commercial property market.
It is, of course, hoped that our politicians will bring in measures to ease the pressure on consumer’s pockets over the coming months but as we are frequently being told our government cannot offer complete protection to individuals against the current cost of living cris9s. In previous articles, I have made reference to that money tree in the garden at 10 Downing Street – regrettably such a tree doesn’t exist , if it did we would all want one !!!
Diane Tait
Associate Partner