UK Restaurants Face Slim Profit Margins Amid Soaring Costs

Asparagus, smoked emulsion, watercress, sourdough (starter, above) at Apricity, London W1

You pay: £21

Restaurant profit: £1.65

“It’s easy to assume vegetable dishes should be cheaper than meat,” says chef-patron Chantelle Nicholson. “Vegetables usually are, but vegetable dishes are more labour-intensive. It’s simple to slap a steak on the grill, but you can’t just plate up a carrot.

“This dish is interesting, because asparagus can actually be more expensive than some proteins. It costs between £15 and £20 a kilo (it was £9/kg not so long ago), mainly because it’s harvested by hand and the cost of labour has risen. It’s expensive even before you start the prep, then we clean them and chop off their woody ends to lacto-ferment, so we can use them elsewhere. We blanch and quickly cool the stalks, then make the smoked emulsion, fried breadcrumbs (using the sourdough we bake inhouse) and watercress puree. The emulsion is made from the aquafaba left over from pressure cooking chickpeas, and is blended with smoked rapeseed oil from Duchy farm. The cost of rapeseed oil has gone up because of the war in Ukraine, but because ours is British, it has remained more stable.

“Overall, the ingredients for this dish are around £3, but the labour, energy and everything else comes to £56 – which, of course, we divide across the whole menu.

“There are so many random costs that nobody sees: things like having our extraction chimney cleaned twice a year, which is tall because we’re in central London, so we need to rent a cherry picker. This makes our annual extraction cleaning bill about £4,000. Add fire alarm maintenance, fire suppression systems and testing, and that’s £8,000. Simply putting tables and chairs outside my restaurant means paying £700 a year to the council. We try to ensure value for money, and use only the utilities we need, but when bills go up in people’s homes, as they have, ours go up exponentially higher.”

The breakdown

Ingredients: £2.18

VAT: £3.67

Staff costs: £8.56

Rent, rates and utilities: £2.41

Running costs (accountancy, PR, pavement licence, waste collections, till system, website, linen, etc): £2.53

Beef sirloin, short rib and wild garlic (main course) at Teal, London E8

You pay: £36

Profit: 44p

“I’ve been open only a few months, and I’m already seeing price increases,” says chef and restaurateur Sally Abé. “Beef has gone up 2.5%, because of ever-rising feed and labour costs, and I have to pay VAT on top of that. So that’s £6.50 for the sirloin, plus another £1.50 for the short rib on the plate, before you’ve factored in any of the costs associated with creating this dish: the plates, energy, labour, business rates – and rubbish collection, which isn’t included in business rates. It’s insane how I can spend so much on bin bags, and with this dish particularly, because we need to drain the bones of the beef after making the jus.

“That jus costs a quid per portion, which seems crazy until you think that into one batch we put three bottles of red wine and one bottle of port, and the price of all of those have gone up, too, as well as veal and chicken stock. We reduce it all down until we get this beautiful, glossy, unctuous consistency, which takes a whole day of labour and energy.

“I think one of the reasons customers struggle to understand the price of restaurant dishes is that the cost of food in supermarkets is so much cheaper. But it also feels as if hospitality businesses are not allowed to make money. Nobody blinks at paying £500 for an iPhone, and Apple makes a significant profit on that. Yet, right now, restaurants are not even in a position to make 10% profit.

“Many of our costs have doubled, we’re being squeezed by rates hikes, and we’re not allowed to increase our prices accordingly. So we’re only just washing our faces – yet we are the backbone of people going out, seeing friends and having fun.”

The breakdown