The finance your Fish and Chip shop needs

According to the National Federation of Fish Friers (NFFF) there are more than 10,000 fish and chip shops in the UK. We eat around 382 million fish and chip shop meals every year, and the industry generates an estimated £1.2bn every year. One of the reasons for fish and chips’ popularity is cost. Even though protected fish stocks and other economic factors have pushed up the cost of the basic ingredients, fish and chips remain affordable - and there’s still a good profit on every portion of fish and chips sold. An HMRC estimate suggests that you might expect gross profits of around 50%. 

Coupled with the growing number of people with busy lifestyles, and increasing demand for takeaway food, it means that there are plenty of opportunities for new fish and chip shops, and for turning around existing businesses. 

Training is available for newcomers to the industry, with the National Federation of Fish Friers offering short courses in fish frying and customer service skills but if you have experience of running a cafe, coffee shop or takeaway, you will probably be aware of the key requirements of customer service, food hygiene and health & safety. You may also be aware of the funding you will need.

Funding requirements for fish and chip business can include:

• Setting up or buying a fish and chip business
• Funding for fryers and other fish and chip equipment
• Working Capital Finance for your fish and chip shop
• Franchising costs 
• Insurance costs
• Tax Loans
• Dealing with problems

Setting up or buying a fish and chip shop

There are two ways to become a fish and chip shop owner.

Buying an existing fish and chip shop could be the simplest route into owning a successful business.

It has some important advantages. Location is vital for a successful takeaway business, and an established shop should have regular customers as well as a location that is proven to bring in passing trade. What’s more, knowing the turnover can make it simpler to arrive at a fair price for the business and can help demonstrate potential lenders that your plans are viable, and make it easier for them to make the decision to lend.

Buying an established fish and chip shop that has become tired may provide you with a sound foundation to build a highly successful business with some investment in re-equipment and marketing.

Contact us to find out more about funding for taking over an established fish and chip shop business.

Setting up a new fish and chip business may also be possible. If you can find a suitable location, perhaps serving a new development, or a town centre which may be undergoing a revival, you may have the basis of a successful venture, although set-up costs may be high, as will the risk that your shop might not find sufficient customers. 

One alternative might be a mobile business. With a suitable vehicle, you may be able to find a number of profitable locations, perhaps serving sporting events and the holiday trade as well as a regular pitch.

Whether your business is mobile or fixed, location can be the key to your success. The best sites may be those with the most passing customers, and you may find that premises with the necessary planning permission will already be in use as a food outlet, with many commanding a premium as a result.

You may rent your premises to begin with, but renting means you will remain at the mercy of your landlord, and at risk of rent increases and service charges.

At Rangewell, we can help you find an alternative to renting, with a Commercial Mortgage.  

Find out more about commercial mortgages.

Funding a fish and chip franchise

Most fish and chip shops are entirely independent businesses - but franchising may be growing in the sector. Operating a franchise could provide you with the backing of an established brand with developed expertise and a proven business model.

You will have to pay an upfront fee to the franchisor who owns the brand, and probably a monthly subscription. You will need to follow this with additional investment in refurbishment, equipment and more to meet their standards. The upside of this that joining a reputable franchise should give you an express route into running a business with proven profitability. At Rangewell, we know several lenders which specialise in franchise funding.

Find out more about Franchise Funding.

Equipping your fish and chip shop

The cost of kitting out a fish and chip shop can be high. The actual costs will depend on the scale of your operation and may include:

• A frying range - the core of your business, with gas or electric heating
• Storage freezer and display fridges – for keeping fish fresh and for displaying cold drinks
• Potato peeling machine – although it may be possible to buy in prepared chips, you may prefer to provide your own
• Batter mixer – to mix the large quantities of batter you’ll need
• Scrap bin – to dispose of any unwanted or unsuitable scraps and keep your kitchen and counter tidy and clean
• Microwave – for rapid reheating of cold food
• POS - a Point of Sale (POS) system is key to a profitable business. A traditional cash register is no longer enough. You may need a reader to take card payments and even a computerised system with stock control.

However, equipment will wear - and a range that has reached the end of its life may be costly to run and prone to costly breakdowns. Even if you buy a fish and chip shop as a going concern, you may need to replace many pieces of equipment.

Fortunately, Asset Finance can help provide the equipment you need. Costs can be lower than a conventional loan because the equipment is used as the security for the loan itself. This simply means that if you find yourself unable to repay the agreement, the lender could simply repossess it. This reduces the risk to the lender and, hence, the cost to you.  

Asset Funding covers both Hire Purchase and leasing. Hire Purchase allows you to spread the cost of buying the equipment you need and will use for the long term. Arrangements for this type of Asset Finance will generally last between 12 and 72 months and need you to pay a deposit plus fixed monthly instalments for the agreed length of term, after which the assets become yours. At Rangewell, we have found that arranging your own finance can be more cost-effective than those of equipment vendors.

Leases work much like a rental agreement and allows you to spread the cost of your fish and chip shop equipment with no upfront payment. This type of finance is usually the most appropriate option for equipment which will have a limited life.

It is possible to arrange Asset Finance for used equipment, reducing costs still further.

Find out more about how Asset Funding can cut your costs.

Operating Finance for your fish and chip shop

You will need to provide for a number of overheads. Firstly, you will need avariety of staff:

• Counter assistant – to take orders and payments, and could also be involved in the preparation and frying of fish and chips
• Preparation assistant – these are the people that keep the engine running in the back, prepping ingredients and ensuring front of house has everything it needs to keep up with customer orders
• Fish fryer – to cook the fish and chips to order
• Waiting staff – if you have eat-in facilities

There will be a cost such as lighting and gas to pay as well as business rates. The bills will still be coming in, even if customers have not yet discovered your shop.

Arranging working capital to help you through this initial period can be essential. You may be able to arrange a Short-term Loan, designed to be paid back as soon as your business becomes profitable. An alternative may be Revolving Credit, which can replace the traditional overdraft facilities which were offered by banks. These can bring a line of credit with an agreed limit.  You only pay for the money you take out, so it can be a cost-effective way to raise funds for the short term.

Another solution to bring in funding may be Merchant Cash Advances. A traditional chip shop will probably take most of its payments in cash, but customers are increasingly expecting to pay for everything with a card. With a Merchant Cash Advance, a lender can work with your payment company and make a cash advance which is repaid by deducting a proportion of the payment every time that a customer pays by card.

Solutions also exist if you are ready to grow your business. If you are already operating a fish and chip shop and want to take on another, Growth Finance could help you secure the level of funding required.

Insurance cover for your fish and chip business

Running a fish and chip shop will mean several types of insurance cover will be essential. Cover for your staff is a legal requirement - remember, they will be exposed to risks from knives, heavy equipment and hot oil. You must have employers’ liability insurance up to the value of £5m if you employ one or more people. This will protect you against the financial cost of a claim against you if an employee is injured or becomes ill as a result of working for you.

You will also need insurance for your premises and equipment and for your liability to customers and the wider public. A public liability insurance policy will cover the legal costs for any claim in the event of an injury or accident in your fish and chip shop.

There are a number of ways to provide for the costs. Find out more about funding for the premiums of insurance cover for your business.

Tax Loans for chip shops

Running a successful fish and chip shop will mean substantial tax demands. You will be liable for VAT,  and a large quarterly VAT returns and a large annual tax demand can cause problems with your cash flow.

Tax Loans are available to let you spread the cost of your tax demands into affordable monthly payments in line with your cash flow. This will help ensure that your business avoids cash flow problems, and can free up cash for use elsewhere.

See how funding for tax can mean better control of your cash flow with fixed monthly payments.

Helping chip shops with problems

Any business can run into financial difficulties. 

A problem with cashflow could mean that you cannot meet your immediate commitments. If you can't pay suppliers, you could find yourself unable to recover.

At Rangewell, we know the solutions which can help deal with this kind of challenge. We can provide funding solution if your fish and chip shop has run into difficulties - and even if you have a damaged credit history or CCjs, we know the lenders which can help.

Find out more about finance for chip shops facing financial difficulties.

Why you need Rangewell to help capitalise your fish and chip shop

Finding funding for an established and profitable sector such as a fish and chip shop can be straightforward. 

However, ensuring that the funding really is the most competitive available and that you are not paying too much for the borrowing you need can need some expert help.

Whether you have a straightforward finance challenge or require a complicated ‘Jigsaw’ Funding plan made up of a combination of products, we can work with you to find the answers that are right for you.

Call us now to get our experts working for you.