We survived two world wars, we survived a pandemic, we've survived a number of
recessions, and we cut our cloth accordingly.
But don't think the business has been through such a tough time.
Welcome to the Venture Bakery. I'm the fourth generation member of the
family business. I have a daughter who's just started as
a fifth generation baker. We've got a bill here signed by my
grandfather from nineteen thirty one. Covid Bakery is one of the many
businesses fighting for survival in the current economic climate.
Retail sales plummeted in 2022 as a cost of living crisis and sky high inflation
took its toll. This forced many companies to go into
bankruptcy and the largest number of insolvencies since the 2008 financial
crisis. In December 2022, insolvencies were 32
percent higher than a year earlier and 76 percent higher than in 2019.
And economists say this is just the beginning of a wave of insolvencies
about to hit the UK. When we speak to insolvency
practitioners, they're telling us they're having an increasing number of
calls from businesses which have reached the point where they're going to have to
close down. And that's an issue because small and
medium businesses are really the lifeblood of the UK economy.
Small and medium sized businesses account for ninety nine point nine per
cent of the businesses in the UK. They employ three and five workers and
about half of the turnover in the private sector.
Wage costs. Ingredient costs.
The energy costs. There are three main areas.
It's about ensuring that we're profitable or if not profitable.
Certainly breaking even energy bills in the UK have reached unprecedented levels
and for businesses like this one that are very high energy use.
That's a big problem. How much do you spend on energy?
Well, it's going up to eight thousand a month.
And how much did you spend last year? That was it was between three and four
thousand a month. So it's doubled.
It's doubled. And we are adapting to the to the energy
costs. We've got a brand new oven that we put
in last year. Here we have units here that are holding
chocolate and icing. So, again, they're switched off at
weekends now. Yeah.
So we've switched off a big part of our deep freeze in refrigeration now.
The energy costs towards the end of 2022 halved the business, contributing to the
25 percent of the revenue they said they lost last year.
A lot of businesses have received help with their energy bills over the last
few months. That support will start to fall away,
leaving businesses responsible for more of their own bills going forwards.
If there isn't any of the house, it will be a problem for us.
We've got a bit reserve reserves and in the bank that would only last a couple
of months. Milk is gone up by 44 percent.
We used for a lot of milk. Ukraine to the chip taste.
Those that come in that went up 36 percent, flour that's gone up by 23
percent. The baker is navigating a price increase
on raw materials. And that's leading to a bigger question
around how much of these costs can be passed on to consumers.
We had three price increases last year. Never, never before.
We have to do that and we'll be looking at another one.
Raising prices comes with a competitive disadvantage.
At a time when people are increasingly policing what they spent.
So baked goods like these ones are a special commodity for, then that's how
much can you put the prices up by our lives?
Like three pound something for the big loaves and where you go to Tesco can buy
for one pound. So we started we started work at five
o'clock this morning. First bakers were.
Our biggest cost is the wages, so they are 50 percent of our turnover.
We currently employ 45 people. Pre pandemic, we were
not far off double that. So we've we're running a far tied to
ship the number of days we opened or reduced,
which has enabled us to employ fewer people but give them a more secure job
to meet inflation. The UK living wage is going up by nine
point seven percent. That adds to the increased costs.
This business will have to navigate this year on top of increasing energy bills.
While it may not seem like much for a business which employs a lot of people,
that's to me a real added extra cost squeezed resulting in insolvencies is
nationwide and it affects long standing businesses like this one.
There are in many ways the fabric of the British High Street.
Yeah, there's a lot of them. Business owner fatigue.
I think the worst case scenario is that over the next twelve months we're gonna
see a lot more business failures. I mean, gaps in the high street and it
means and here employers in the UK. There is always room for
cutbacks, although we think we've hit as many cutbacks as we possibly can.
It grinds you down eventually and that's probably a lot of the reason
why businesses are closing. But I think if you if you embrace the
challenge, then there will be light at the end of the tunnel.