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Electricity costs have soared to such an extent that most cafes are “just one broken piece of equipment” away from closure, according to a former youth worker who opened a cafe in Crumlin in Dublin four years ago.
Paul McDonald of Pip’s Café and Deli on the Old County Road says businesses like his are beginning to wonder if there is “any light at the end of the tunnel.”
“So many restaurants and cafes have gone under lately. It is really tough times. Our electricity bill over an eight-week period pre the cost-of-living crisis would have been about €1,300 on average.
“Our gas bill would have been €400 on average, which was about €12,000 a year. Our electricity has gone up to about €4,000 on average per bill and our gas is about €800 per bill.
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“It has gone from about €12,000 give or take up to €35,000 – €37,000. That is the difference of about €500 a week. It is bigger than our rents, rates ... everything combined. It is like having an additional member of staff.”
Paul says that he can’t expect customers to pay an exorbitant amount of money for a tea, coffee or sandwich.
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“We are a community-based cafe. If you put 20 cents on to a coffee, 50 cents on to a roll people are going to notice. And in a cost of living crisis people will compromise quality over price. They will go for the cheaper option. We can’t pass any more increases on, so we just have to absorb them.”
Paul says that they have had “everything thrown at them” since they opened the business in 2018.
“When we saw the end of Covid, we thought that was it. To be honest the cost-of-living crisis is worse.
“Covid was a different time. A lot of people had their income protected. It didn’t affect social welfare recipients. People were able to work from home. Covid wasn’t too bad, but this is the nail in the coffin. You only have to look at the number of closures.
“During Covid a lot of businesses were warehousing VAT and employers’ PRSI and that, in the hope that when Covid ended and things that got back to normal they would be able to pay that. People are looking at €50,000 to €60,000 with bills warehoused with Revenue which they have no chance of paying.”
Unfortunately, Paul says that along with electricity and gas, they are seeing unsustainable price increases right across the board.
“Everything has also gone up in price. One of the biggest outgoings for us that you see nothing back from is packaging. Packaging has gone about 200 per cent up. It has gone crazy. Things like a box you put chips into – they have gone from 15 cents to maybe as high as 35 or 40 cents.
“Dairy products are also going up big time. Butter, cheese. Chicken has also gone through the roof. It is total and utter chaos. And it is survival now.”
He says for small businesses it would only take one small piece of equipment to fail for you to “go under.”
“We have a combi oven out the back. A new one would be about €10,000 to €12,000. If that packs in, we are gone.”
Paul says that he has often gone without his wages in order to find the money to pay his seven staff members. The only place left to make cuts is in staff and that is something he dreads thinking about.
He also “feels terrible” when local charities contact him looking for gift vouchers for raffles and he has to turn them down because the money isn’t there. As the cafe is so rooted in the community, they have always liked to help out where they can.
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Meanwhile, Paul decided to open a cafe after he reached the age of fifty and felt he was too old to continue to be a youth worker.
“I was thirty years in youth work and I was reaching fifty years old and I was getting too old and I felt I was becoming no longer relevant to young people. I always had an ambition for a local community-based cafe. To be part of the community and to give to the community.”
Management and staff at Pip’s Café and Deli are extraordinarily fond of their loyal customers. Paul says that all they want to do is get through the next few months in the hope of better times ahead.
“We have some great customers. One in particular who is a retired postman. We slag him saying he is part of the staff because he is there so often. We are 100 per cent local and independent.
“Every morning you wake up there is an email from a different supplier about increases. Long A4 pages of increases. I am nearly just closing the emails not even looking at the prices and just checking to see if there is enough there to meet the bill.
“I know I am facing in to my ESB bill on January 8th or 9th. I am dreading that. To think that your electricity bills is two and a half times your rent in a business is crazy. I am waking up at 5am looking at numbers on my phone.
“It is draining. I would be good at marketing normally, but my heart isn’t in it. This isn’t about making profit. This is about survival and trying to come out the other side. Many cafes haven’t made it and after Christmas there is going to be many more gone.”