MANY FAR MORE interesting people than me have had their say about the bizarre kerfuffle surrounding the Cereal Killer Cafe in Brick Lane, east London, and Channel 4 News, but.
Basically, a new cafe has been set up in a fairly run-down area of London.
It sells bowls of cereal to people for about three quid a pop. Its decor is all 1970s and 1980s kitsch (I think), with Shoot! annuals and old copies of Smash Hits about the place, which means customers get a metaphorical taste of childhood along with the real one.
Channel 4 ambush-interviewed the owner on Day One, and asked him what he thought he was doing selling cereal for £3 a bowl when there were poor people living in the area.
Why am I interested?
Because that question betrays an utter lack of understanding on the part of that journalist as to how small businesses (maybe any business) operate, and I run a small business.
Worse, it was later picked up by (among others) Isabel Hardman, who writes for The Spectator, a magazine I read.
Her piece was described as ‘a defence’, but it didn’t really address the main issue, which is: Is £3.20 actually a rip-off for a bowl of cereal?
Answer: if Cereal Killer Cafe’s only cost is the cereal, which they can buy in at, at most, c40p a go (this is a non-wholesale price – punters can buy boxes of the stuff at £5 for thirteen servings), then maybe you could argue that it is.
But they aren’t.
As well as cereal (some of which will doubtless have to be thrown away as wastage), I’m fairly sure their other costs will include (but are not necessarily limited to):
- Business rates
- Staff costs
- Cleaning and maintenance
- Decor and general kitscherie
- Advertising and promotion (they need less of this now)
- Book-keeping or accountancy
Every single bowl of cereal that they sell has to make a contribution to those costs, or they are gone.
And it’s when you add all of these things up that you realise that there may not be that much profit to take out of the Cereal Killer Cafe – profit, of course, upon which they will also have to pay tax.
It’s not dissimilar to the cost of a book.
Our latest is At The Going Down Of The Sun, a heart-rending series of pieces about soldiers and Royal Marines killed in Afghanistan.
The jacket price is £18.99, which we are very conscious is quite a lot of money.
But only an idiot or a Channel 4 reporter would assume that the entire £18.99 is our take, or that the fact that there are some people who simply can’t afford £18.99 for a copy should influence our pricing. It couldn’t.
This is because, by the time was have paid for typesetting, proofreading, jacket design, printing, images, author’s expenses (significant, when you consider he travelled all over the UK to interview almost a hundred people), the retailer’s share (usually fifty per cent of the jacket price or more) and the cost of sales and distribution, and then the author royalty, we will make a very modest profit (nothing like even the print bill alone) if we sell out the entire print run.
I am no accountant, and I have no idea if there are major illegal tax scams being perpetrated by international business conglomerates – and if there are I think they should be prosecuted – but seriously, small cafes in Brick Lane are not a fair target, no matter how irritating one might find their beards.
Read Full Post »