The reality of price pressures – Village Pizza’s Katy Habibian.

DAILY CHALLENGES

We have been suffering price increases on products and packaging since the end of last year and this makes managing a business very difficult. In fact, shortages of products and volatile prices have been simmering since the start of the Covid-19 crisis.

There is no way to exclude yourself from this crisis - whether that be by brain or physical power! - and unfortunately the result is a price increase to the customers. For example, I invested a lot of time working on an expansion of our menu that excluded the use of flour, cheese and packaging, as they were our initial casualties of price increases, but the cost price of ingredients since February has risen by 150% at best case and 300% at worst. This means that even our proactive work undertaken to survive the rising costs is futile, as every section of every market is being affected.

Restrictions to sales is costing us as businesses more time which equates to more money also. We have a history going back years with our suppliers and wholesalers, where we purchase, for example, six drums of oil a week, and now we can’t, in turn meaning that we have to keep taking time out of our business to shop multiple times a week. And, whilst the queues for entry into shops are no longer there, we frequently find shelves empty and rampages for products.

JUGGLING ACT

Over the last few months with the rise in costs, including the minimum wage and the National Insurance increase and VAT rise, a lot of stores are managing their staff costs by owners back to being on shift, which is very difficult when daily trips are having to be made to wholesalers as well. The increases in pricing means that a task that previously could be carried out quarterly - such as profit and loss, product profitability and availability - is now almost a daily task, or at least needs to be. When ordering products online or by telephone, there is a big warning stating that prices may increase at the point of collection or delivery. This means that we place an order for delivery to the value of £1100.00 on a Friday, but by the time a delivery arrives on a Monday, the cost of the delivery is £1400.00. Similarly with same day collections too. It is a worry when same day costs are increasing, or pre-ordered ‘already in stock’

The subject of food and ingredients price rises is a very topical subject right now, and unfortunately not a new one, reflects Katy Habibian of London-based Village Pizza.

products. We are being used to increase profitability for suppliers at points when we can least afford it. If we do not stay on top of the profit and loss aspect of our business, we can end up selling products at a loss, especially with the ongoing issues of updating online menus and prices – usually meaning you lose your online presence and income, as negative as the income may be, but it is desperately needed cashflow. We have had to take the decision to remove popular items altogether as the price to customers would just become unaffordable, and with space in our storage at a premium, we cannot afford to use space on loss leaders, or products consumers cannot afford to purchase or involve a row about why has the price increased.

MAINTAINING QUALITY

Quality is continually compromised, deliveries are sent and wholesalers stocked with products that have continually changing allergens (due to their own supply chain issues), recipes and sizing. For restaurants that take their quality seriously, this is adding another layer of stress and uncertainty. I advise all of my stores to stay on top of their allergens and whilst they do - we all have printed menus and an online presence - the updating is not always in our hands. Our solution is to label everything we sell with a label requesting that customers with an allergy, contact us immediately, in order to carry out an accurate on the spot check. Obviously as a pizza store, flour is a main ingredient for us, and the availability of flour seems to be uncertain. No flour means no pizza, so what should we do next? The thought that the last 30 years of my life are about to go down the drain, because I cannot obtain flour is very worrying, and a fear that escalates as the rents and the bills in the shop need to be paid too; all of which are secured using a personal guarantee resting on my family home.

Never would I have imagined that such a scenario would occur. The solution? I don’t know, but the future is uncertain.