'Bakery boom' is no match for mountain of costs, pastry social media stars tell Chancellor

Bakeries have warned the Chancellor that a mountain of costs is ‘making it impossible’ to stay open even with social media hype helping to generate queues out of the door.

People are increasingly opting to socialise over a pastry than at pubs, bakeries say. Some Gen Z followers will even travel for miles or queue up to visit spots popular on social media and try ‘viral’ pastries.

But a bakery boom has not been enough to battle increases across business rates, employment costs and ingredient prices, they say.

Rebecca Rosmini, co-founder of Signorelli (pictured), have urged the Chancellor to cut VAT and roll back rises to National Insurance contributions. 

They join a chorus of business leaders, including Sainsbury’s boss Simon Roberts and The Entertainer founder Andrew Murphy, who last week urged the Government to stick to its promises to help boost growth and support entrepreneurs.

Rosmini said: ‘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.’

Bakers, including Rebecca Rosmini, have urged the Chancellor to help small businesses with heavy costs to support the High Street.

She and her husband Alberto opened their first site in Stratford, east London in 2015 and now operate seven bakeries nearby.

It has attracted young customers due to popular products, including its cold foam Tiramisu and Berry Matcha latte (pictured) and a Tiramisu cookie collaboration with Great British Bake Off favourite Sandro Farmhouse.

But she said she understands why Jeremy Clarkson recently asked why anyone would set up a business in Britain right now and ‘something has gone fundamentally wrong’ when businesses supporting growth are ‘financially penalised for doing so.’

‘We are doing everything the Government says it wants businesses to do. We are creating employment, investing in our high streets, supporting local suppliers, training people and building stronger communities.’

In her first Budget in 2024, former chancellor Rachel Reeves increased the employer National Insurance contribution rate from 13.8 per cent to 15 per cent and reduced the secondary threshold to £5,000.

This caused fury among retail and hospitality firms because it dragged many part-time and lower-paid staff into the tax for the first time.

Bakers say there is no way to avoid how labour intensive it is to run their businesses and that they can help provide a solution for worrying levels of youth unemployment if hiring is made less expensive.

Higher wage bills, energy costs and ingredient prices have also added pressure.

Rosmini added: ‘Hospitality doesn’t need another speech about growth. It needs a Budget that makes growth possible. My message to Burnham is this, don’t wait until our high streets are empty to recognise what you’ve lost.

‘Once an independent business closes, the jobs, relationships, skills and sense of community it created cannot simply be switched back on.’

Customers are flocking to bakeries after spotting products - from matcha drinks to pastries - on social media. 

Firms are ‘being squeezed between rising costs and what people can realistically afford to spend,’ Rosmini added.

Hospitality campaigners, including celebrity chef Tom Kerridge, have been lobbying the Government for a VAT cut – reducing the rate paid by hospitality from 20 per cent to 10 per cent.

They have pointed to lower rates in other European countries. Ireland cut its VAT rate for food-led hospitality businesses from 13.5 per cent to 9 per cent this July.

Bakeries are operating closer to breaking point than customers would ever imagine. 

Lydia Papaphilippopoulos-Snape, who owns the Warwick Street Kitchen bakery in Warwick as well as three other cafes, is also among those backing the industry calls.

‘Many bakeries are operating closer to breaking point than customers would ever imagine. Sometimes, they're just one major piece of equipment breaking down away from a serious financial crisis.’

She added: ‘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.’

Karen Dear, chief executive of the Craft Bakers Association (CBA), said: ‘Independent bakeries are not asking for special treatment. 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.’

Around 28 per cent of bakers have cut jobs or slashed working hours while 100 per cent have raised prices, according to a survey of The CBA members.

London bakery Popham’s is regularly raved about online for its signature pastries, including its bacon and maple spiral and a Marmite, Schlossberger and spring onion swirl.

But founder Ollie Gold said ‘monstrous’ cost increases are threatening the ‘freedom and innovation’ that he started the business to pursue.

He said his customers would not pay £10 for a pastry but increases to certain ingredients – including hazelnuts and butter – are making it harder to produce experimental products.

Customers will happily traipse around his neighbourhood, much like a pub crawl, trying out different cafes.

‘The more bakeries you have, the better for communities,’ he says. ‘It’s not like restaurants where if you go for dinner, you’re not going to go for another dinner after.’ 

‘You can go to the Dusty Knuckle for a sandwich, buy a pastry at Popham’s and then buy a loaf of bread at the E5 Bakehouse,’ Gold says.

The ‘bakery boom’ has been growing over the last five years or so, with Covid inspiring a wave of home-baking – some of whom even went on to open hospitality businesses, he says.

‘People have started socialising less in pubs and restaurants, in the evenings and socialising more in morning. We see groups meeting at 7.30am for pastries and coffee, it’s now a bit like the culture in Australia and New Zealand.

A lot of his friends in the sector are considering closing but he believes it is the job of hospitality firms to ‘improve people’s day’ while ‘the world is tough.’

Paul Bowen was forced to close one of its shops, citing higher employment costs as the reason.

One business that has shut recently is Bowen Pies, which closed one shop in Chorley. 

‘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,’ owner Paul Bowen said.

Bowen, who appeared on business series The Apprentice and now runs two shops, blamed the hike in National Insurance contributions for the closure. 

He hopes that above all the Budget will provide ‘some breathing space for independent businesses’.

‘In a bakery, energy, ingredients, wages, employer National Insurance and business rates all have to come out of the price of a pie. 

'There is only so much we can pass on before customers simply cannot afford it.’