Minimum Wage Change: What’s Does It Mean For Indies?

Good news for employees, but how does this affect employers? Our sector can boast an impressive number of businesses, small and large; does the new legislation affect one more than the other, or do both face an equally unsettling change?

While some Speciality Food readers represent large food halls, booming city centre delis and destination farm shops, a number of our readers own and run their business with a two-person team – with extra staff an unaffordable luxury – so what does this mean for them? We speak to a successful two-person deli to get the view on the ground.

Mark Kacary, The Norfolk Deli
My wife and I own and are directors of the business, so like many small business owners we pay ourselves what the business can afford. As directors we seek to reinvest as much as we can into the business. Replacing equipment which needs replacing, buying new equipment and developing new market sectors so that eventually we may reap the rewards of our hard work. What this means to us, though, is that to pay ourselves the existing minimum wage could be considered to be a major wage increase.

This news offers both positive and negative points. The positive in any wage increase is that it puts more money into the pockets of employees which makes them feel better about themselves. We took the decision when starting the business that we would do for without additional staff. This is not that we will never employ staff, it’s just that we appreciate the use of the word prudence and that within most businesses wages constitute one of the largest drains on revenue/funds. When you consider that as with many delis the average spend per customer is nothing like the average spend per customer in a large retail store, it would require a combination of the following to happen before we make the decision to employ additional people.

1) a substantial increase in either footfall or average customer spend
2) for this increase to be seen to be continual and not a sudden spike
3) the introduction of services which stretches us to the maximum and prevents us from offering the level of customer service our customers have grown to expect

What will always be a constant is affordability. As a business we have to know that we can afford to employ somebody and that the job we’re offering will be long term, challenging and fulfilling. It would be our aim to pay above any minimum wage as it would be our expectation that we would require the best and therefore pay accordingly. The minimum wage is a headline figure and an indicator as to what we should expect to pay as a bare minimum. It therefore helps us to determine when we can afford to employ somebody.

It’s difficult to second guess how this would affect bigger indie retailers. One is tempted to say that the immediate concern I would have if we were of the size to employ 10 or more people is not only the affordability of this, but what impact is to going to have on profitability of the business. All businesses, large and small, need profits. These are needed to reinvest to ensure that the business can remain in business. Profits are needed to employ people! We have all seen situations where business profits have been affected for whatever reason and the result being the cost saving exercise of reducing the size of a workforce.

It’s easy to look negatively and just think, “this is going to cost me more!” With the resulting knee jerk reaction that one has to either forget about employing staff or, even worse, that staff will need to go to pay for the extra wages. The alternative view, of course, is that the industry should embrace this and see it as an opportunity. After all, this isn’t a directive aimed at the independent food and drink industry alone. With more people shopping locally, with more people wanting to buy things locally, this could be seen as an opportunity. More people may have a few more pounds in their pockets. They may want to spoil themselves from time to time, which means as a small deli in Hunstanton we will be working with our customers, listening to them and seeking to offer them whatever it is their extra income allows them to buy. That should mean in time that as owners we might eventually pay ourselves the minimum wage whilst seeking to employ somebody.