The mob has spoken and Britain now embarks on its uncertain journey to leave the EU (whenever that may actually be). I can’t help but feel the debate to stay or leave the EU has somewhat missed the point, with those who voted leave yesterday shouting their frustrations via an x-in-a-box rather than fully understanding the real consequences of leaving. Interestingly, everyone I have spoken to this morning (commuters on this morning’s train mainly) have expressed their shock and disbelief at how foolish we’ve been. Which makes me wonder, where are all the leave voters and what do they really think now?
As the proud owner of a coffee shop and café business, leaving the EU poses many questions and I have to make the assumption that those who voted leave either have very deep pockets, or, simply don’t enjoy drinking coffee or eating out.
So what does leaving the EU mean for my business? Most of the impacts are purely conjecture at the moment, but there are some almost-certainties.
Firstly, with interest rates certain to rise (the bank of England can only hold off for so long) will increase the cost of lending making growth a much more expensive business. Private equity is always an option to fund growth but this inevitably results in small business owners being forced to give up equity, or stay small.
Secondly, apologies for the patronising tone, but coffee doesn’t actually grow in Birmingham. This means we have to import it. This morning’s crash of the pound down to the lowest level since 1985 (at one stage it hit $1.33 to the pound) means the cost of importing in the short term has dramatically increased. This will push up the cost of coffee by around 10%. When it comes to milk, the EU has been heavily subsidising British dairies for years now, unsustainably, but the short term impact will mean milk prices will have to increase to ensure the dairy farmers can make a profit; further price increases.
On a quick non-EU point, these inevitable price increases of our raw ingredients will be compounded further by the recent increase in minimum wage (which has increased staff costs indirectly by around 17%). Certainly not a bad thing in principal, but when added to the cauldron of increased costs and uncertainly means that the cost to make a coffee has leapt up considerably. Flat white - £3.20? I don’t think anyone is ready for that yet, but the numbers have to add up somehow.
A similar trend will be seen across the majority of what we sell here at Yorks, so maybe its time for a change. A change of taste to a simpler, local-only way of eating, or maybe global warming will open up new opportunities in farming and we’re all worrying about nothing.
My children tried planting an avocado stone in the garden a few weeks ago but its not going well.