Bakery Owners Warn Rising Costs Threaten Survival Despite Social Media Popularity
Independent bakers face insurmountable financial pressures from increased business rates, employment costs, and ingredient prices, jeopardizing high street vitality.
Despite a surge in popularity driven by social media, bakeries are warning that a "mountain of costs" is making it impossible for many independent businesses to remain open. Owners report that escalating expenses for business rates, employment, and ingredients are outweighing the benefits of increased footfall and viral trends.
Rebecca Rosmini, co-founder of the seven-site Signorelli bakery chain, highlighted the unsustainable burden of taxation, employment costs, energy bills, and business rates. "The mounting burden of taxation, employment costs, energy bills and business rates is making it impossible for independent hospitality businesses to survive, let alone grow," Rosmini stated, urging the Chancellor to consider tax cuts, including a reduction in VAT and a rollback of National Insurance contribution increases. She noted that businesses contributing to employment and community, as encouraged by the government, are instead being "financially penalised."
This sentiment is echoed by other business leaders who have called on the government to support growth and entrepreneurs. The increase in employer National Insurance contributions implemented in 2024, which raised the rate and lowered the threshold, has been particularly impactful, drawing many lower-paid and part-time staff into the tax for the first time. Bakers emphasize the labor-intensive nature of their businesses and suggest that making hiring less expensive could help address youth unemployment.
Customers are increasingly choosing to socialize at bakeries, with some Gen Z patrons traveling significant distances to visit popular spots and try "viral" pastries. Products like Signorelli's cold foam Tiramisu and Berry Matcha latte, along with collaborations, have driven this trend. However, this increased demand is often insufficient to offset the rising operational expenses. Firms are "being squeezed between rising costs and what people can realistically afford to spend," Rosmini added.
Campaigners, including celebrity chef Tom Kerridge, are advocating for a reduction in hospitality VAT from 20% to 10%, citing examples like Ireland's recent cut to 9% for food-led hospitality businesses. Lydia Papaphilippopoulos-Snape, owner of Warwick Street Kitchen, warned that many bakeries are operating precariously close to financial collapse, where a single equipment failure could trigger a crisis. "It doesn't matter how busy you are, or whether you have people queuing down the road. When the cost of doing business is this high, turning that footfall into a sustainable profit is becoming incredibly difficult," she said.
A survey by the Craft Bakers Association (CBA) revealed that 28% of bakers have reduced staff or working hours, and 100% have increased prices. Ollie Gold, founder of London bakery Popham’s, described cost increases as "monstrous," impacting the ability to produce innovative products. He noted that while customers enjoy a "bakery crawl" similar to a pub crawl, the rising costs for ingredients like hazelnuts and butter make it difficult to justify experimental, higher-priced items.
The "bakery boom" has grown over the past five years, partly fueled by a post-Covid increase in home baking and a shift towards morning social gatherings over evening pub visits. However, the economic realities are forcing difficult decisions. Paul Bowen of Bowen Pies recently closed one of his shops in Chorley, citing increased employment costs as the primary reason. "That is a painful decision for a family business, and it brings home what these rising costs mean, jobs, livelihoods and another shop disappearing from the High Street," Bowen said.
Karen Dear, chief executive of the CBA, stressed that independent bakeries require a business environment that acknowledges the challenges of small business operations and allows for planning and growth, rather than constant cost management. "Independent bakeries are not asking for special treatment," Dear stated. "They need a business environment that recognises the realities of running a small business and enables them to plan, invest and grow, rather than continually having to respond to increasing costs and regulatory demands."