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Sector Spotlight Fish and chip shops

Sector Spotlight: Fish and chip shops

Fish and chips are a quintessential British dish, and with cod and haddock stocks recovering, our appetite for the nation’s most beloved takeaway is stronger than ever

Facts and figures

  • British patrons consume around 382 million portions of fish and chips every year, equivalent to six servings per person
  • 80% of Brits get takeaways from fish and chip shops at least once a year
  • Annual UK spend at fish and chip shops is a staggering £1.2bn
  • UK has about 10,500 fish and chip shops – far more than McDonalds (1,250 outlets) and KFC (850)
  • Fish and chips contain a third fewer calories compared with other popular fast-food takeaways
  • The 87-year-old Harry Ramsden’s brand boasts 35 franchised outlets around the Industry employs around 85,000 people

A British staple

The dish was first introduced by a Jewish immigrant, Joseph Malin, who opened the first recorded fish and chip shop in London around 1860. Only 50 years later, there were more than 25,000 fish and chip shops across the country, and in the 1920s those figures hit 35,000.

Post-World War Two, the industry experienced years of decline, with many consumers opting for formal dining experiences and European cuisine. However, when the Great Depression hit, the humble fish and chips came back on the menu.

Eight decades later the sector’s biggest problem is not demand but supply. After two decades of overfishing, North Sea cod stocks plumbed to dangerously low levels and many eco-conscious Brits began boycotting fish shops.

However, in the last five years there has been a recovery in cod populations and sustainability is central to the sector’s future.

Across the country, the price of fish and chips ranges from £4 to £6, making it an affordable takeaway for all demographics.

A medium-sized chippy can expect a turnover of between £2,000 and £4,000 a week

Business models

Freehold property – This means buying the premises outright. A more expensive option initially, if

you can afford it then it does at least free you from paying ongoing rent.

Leasehold property – You must factor in the terms of the lease and determine whether you need to negotiate certain aspects. The lease terms and business turnover will determine the purchase price of a leasehold property.

Franchise – There are opportunities available, not only with well-known chains such as Harry Ramsden's, but also with family-run operators who are growing their businesses. However, there are very few franchised operations in this sector; the vast majority are independently owned.

The benefits

  • Largest takeaway trade in the country, with 22% of people visiting fish and chip shops every week
  • Recession-proof industry (still a budget meal despite rising costs)
  • Very few chain brands; remains dominated by independent shops
  • Well-suited as a family-run business
  • Franchise opportunities available

Challenges facing the sector

Fish and chip shop owners are faced with soaring cod and haddock prices due to dwindling Icelandic fish stocks. Two thirds of fish sold at Grimsby fish market, for instance, comes from Iceland and stock levels were down around 50% in early 2017, indicating a supply crisis.

Fishermen strikes are also having a knock-on effect to fish friers and many businesses are left with no choice but to increase prices to maintain a profit margin of between 58 and 60%. The national average price for a portion of fish and chips is currently around £4.50.

The cost of potatoes also varies significantly depending on the time of year. The amount of arable land suitable for rain-reliant potato production in the UK is expected to decrease by 75% because of climate change.

Diversification

Shop owners can tackle these challenges through menu diversification – kebabs, burgers, grilled fish for health-conscious consumers – and by offering customers more sustainable fish.

Local demographics will influence which menu items are the most successful. Be sure to review sales figures and adjust the menu accordingly.

Delivery services such as Deliveroo, Just Eat and Uber Eats are changing the dynamics of the takeaway sector, with many customers preferring a hassle-free delivery service. Signing up to these services and offering delivery could be another way to diversify your business and help you secure new customers.

Support

The National Federation of Fish Friers (NFFF) provides support to the sector, notably striving to create a level playing field with regards to VAT. Currently, all takeaway food businesses must pay 20% on all hot food they sell, whereas supermarkets and retailers, such as bakeries, can do so without paying any VAT. 

The association is asking members to make a protective claim for overpaid output VAT plus interest on sales of fish and chips in the last four years.

There are also affordable funding options for entrepreneurs hoping to start up in the industry, with lenders offering loans tailored to the sector that range from £10,000 to £500,000 and are 100% tax deductible.

What it takes to be an effective fish and chip shop proprietor  

This business is not to everyone’s taste. Experience in the fast-food, hospitality and other customer-facing industries is hugely beneficial. You must also be a dab hand at food preparation and portion control; servings should be finely balanced to keep customers happy and profit margins high.

Many fish and chip shops rely on regular custom. In a competitive fast-food sector, going that extra mile will make you stand out.

For example, you could add gluten-free fish and chips for those with coeliac disease or gluten intolerance.

Embed yourself in the local community by offering discounts on large orders and provide fish and chip dinners at community functions such as school quiz nights or birthday meals at a nearby residential home.

Supplier relationships can be just as important as customer interaction. Suppliers are likely to offer discounts or promotions if you use them regularly and establish strong relations.

It’s not only fine-dining restaurants that get Trip Advisor reviews; customers share their thoughts on takeaways too. Make sure all food fried, bagged up and sold on the premises is five-star worthy and customer service is second to none. 

Essential skills

  • Great customer service skills
  • Fish frying skills and ability to cook under pressure
  • Ability to motivate, manage and train your team
  • Ability to build strong relationships with suppliers
  • Cash-handling and other general business/retail skills
  • Willingness to work evening and weekends
  • Willingness to adapt and diversify
  • Ability to maintain high standard of hygiene and cleanliness
  • Stringent food portion control when preparing and serving food

Going mobile

Fish and chip vans are another avenue to consider for those wanting to break into the sector on a tight budget. Vans range from £6,000 to £22,000 depending on their condition, with most fully-equipped vans costing around £15,000. Mobile franchise opportunities are also available, allowing entrepreneurs to service villages and towns within a 30-mile radius.

Being mobile also gives entrepreneurs the chance to chip and fry to the masses at music and food festivals around the country. More than 200,000 people, for instance, attend Glastonbury, with around 500 traders setting up stall. Capitalising on such a large captive audience can reap huge profits and build up brand awareness.

Buying an existing fish and chip shop

The first thing to consider when buying an existing fish and chip shop is the turnover in comparison to the purchase price; ask yourself whether the turnover can be improved and how achievable will this be?

Also consider the fixed costs –rent (if you are purchasing a leasehold property), council tax, etc – in relation to the purchase price. Remember, if a shop has a high turnover you must still compare this to the running and fixed costs of the business, as the shop could leave you with similar profit levels to a business with lower footfall but lower fixed costs too.



Jo Thornley

About the author

Jo joined Dynamis in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.

@BusinessMaiden

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