The owner of two cafes in Co Antrim said businesses face difficult decisions as cost rises are to be implemented from next month. From April 1, minimum wage and employer national insurance contributions will rise, at the same time rates relief will be reduced.
Lesley McCaughan and her husband Mark own Follow Coffee in Ballymena and Follow Coast in Portrush. Taking over the popular Ballymena cafe just two weeks before the coronavirus lockdown, Lesley said it has been a challenging first five years in business, with new costs adding to this pressure.
From the uncertainty of those first few months of the pandemic, to the uncertainty that comes with rising costs, Lesley said they, like many other small businesses, are having to look at cost-saving measures such as closing for a few days a week or reducing opening hours.
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Speaking to Belfast Live about the impact of rising costs, she explained: "The hardest thing for me is our Portrrush site. It's so seasonal, so I really need to make as much money as possible during the busy periods over the summer, Easter, Halloween - whenever kids are off school.
"I opened every single day, but this year unfortunately I've made the decision to close two days a week due to rising costs. I always knew I was going to run at a loss on the days where it was quieter, and I was able to sustain that because of the summer and the seasonal rush, but now the costs have got so far into that.
"We get a lot of locals visiting and it's important to me they don't think I'm just there for the tourists because that can happen in the North Coast area, where businesses close during the off-peak to get the tourist trade and then the local people won't come to you. I've built up a lot of regulars in the Portrush area, so it's really important for me to try to sustain that.
"But the only thing I can do now at this point is close two days a week, and with that it means I save the jobs I have because I can manage it on the staff that I have without recruiting and then I'm not guaranteeing someone hours I don't know I'll have."
Despite Follow Coffee being in the heart of Ballymena and having good footfall, Lesley said rising costs from suppliers are impacting profits. However, when looking at making changes, she is keen not to scare customers away with price rises.
"I don't want to lose the customers I have, so you're very conscious of any price increases that you have to make because you don't want them to go somewhere else or you don't want them to not come out for coffee," Lesley said.
"You're having to really take all of those factors into consideration when you're looking at your menu, and sometimes it's a case of that you're having to take the heat rather than put it back on the customer.
"It's challenging, but when you start looking at whether to close an hour earlier, for example, then saving the electric costs and staffing costs. But as cheesy as it sounds, I have a real community of people that come into this place not just for coffee, but to see us and for the craic.
"I have a lot of customers that come in for a wee bit of craic and then 4 o'clock after work, they come down for a coffee and they maybe stay till after 5 because they're loving the chat. And I'm like, well, what happens to those people if we were forced to close earlier?
"We've created a community, we have people coming in here telling us about the promotion they got, they come in to tell us they're moving house or about their new baby, and you know, we want to be there for people. I don't want to close at 4 o'clock to disappoint those people, but that's the kind of the decisions now that I have to make.
"I'm analysing that every day, what are we doing between 4 and 5, are we doing enough to keep the doors open or do we open later in the morning."
Lesley employs over 20 members of staff between her cafes, and said her priority is ensuring they get paid. Despite minimum wage increases, she worries people won't have the discretionary income to come out for lunch or a coffee.
She said: "I have staff relying on me, they have mortgages, they have cars and kids. This is my livelihood and theirs, so I have to find a way to make it work.
"People on minimum wage will have more money in their pocket, but they won't really when it comes to prices rising and inflation increasing. Our spend per head might be less, as people don't have the disposable income.
"We would have days where you're really busy, you've been rushed off your feet and you look at your till and think, is that all we did today? It felt like worse or felt like more, but it's because maybe say it's getting close to pay week and customers don't have the same money, so they'll maybe not spend as much."
Highlighting the important role hospitality plays within the wider tourism industry in Northern Ireland, Lesley is calling on Stormont to reduce VAT for hospitality businesses to try and reduce the sting of employer cost rises.
She said: "The government talk about a ten year plan for growing tourism in Northern Ireland, but the problem is when you've got the Republic of Ireland having a VAT rate of 9% as compared to our 20%, if they're gonna be able to produce goods and services cheaper, what's going to make people come to the north? Businesses are going to have to pay more and maybe aren't getting the same value for money, so that becomes a big challenge as well."
Colin Neill from Hospitality Ulster described rising minimum wage and employer national insurance contribtuions as "the straw that broke the camel's back" for the hospitality industry. He added: "We were worst impacted by Covid, we never got a chance to recover as we then got hit by the cost of living crisis, and we live in that discretionary income area so if anything hits the economy we're the first to feel it.
"We're the worst impacted right across the UK in our sector. The new budget will add £2,500 per head to a 38 hour employee for businesses - it's colossal. We are seeing a lot of businesses reducing hours, and that's even in Belfast city centre. We're seeing reduced staff members, all recruitment is on hold, and businesses are feeling the pressure of that."
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