Opting for transparency: Businesses sharing costs with customers as inflation hurts prices

With more firms hiking prices to cope with inflation, some are getting candid about the cost of doing business

Guji Coffee in Cork's Marina Market

As stubborn core inflation continues to hurt firms and consumers alike, small business owners opting for transparency are sharing their operational costs with customers, shining a spotlight on financials historically kept in the dark.

With more than half of small to medium enterprises (SMEs) across the country raising prices to cope with sticky inflation, some are taking this as an opportunity to educate customers on the costs of doing business as a means of explaining and defending recent price hikes.

One such business is Guji, a boutique coffee bar with locations at Cork's Marina Market and O'Connell Street in Limerick, which took to social media last week to show, in detail, the price of opening their Limerick coffee shop earlier this summer.

In the first of a three-part series, owner, Alan Andrews outlined the first fixes, legal fees and deposits paid on the O'Connell Street shop, which came to a total of €17,000. 

Tip of the iceberg

Speaking to the Irish Examiner, Mr Andrews explained that this is just the tip of the iceberg, with the total fixed costs - which will be discussed more in upcoming videos - coming to more than €100,000.

"€17,000 alone went to the initial costs. After that, €65,000 was spent on equipment, with an additional €25,000 put towards the final finishes."

That excludes labour costs, Mr Andrews explained, which he says have also skyrocketed in the past twelve months. 

"Last year, for every €100 Guji brought in, €30 went towards paying staff. Fast forward to now, it's about €37."

Factoring in the costs of higher-end coffee stock, labour retention and education costs for staff - which Guji also pays for - Mr Andrews says they have had to find a new pricing plan to suit their costs.

Guji Coffee Bar on O'Connell Street, Limerick

Explaining why he has opted for such transparency, Mr Andrews said that a common misconception about coffee shops is that they are cheap to run.

"There is a minimum entry level that you can go in at, but you will end up compromising the quality of your product. I wanted to show people that if you really want to get into the business and do it properly, these are the costs you may be facing." 

Another business owner employing a similar method of transparency is Rob Coughlan, owner and manager of the Boatyard in Cobh. 

Opening the site just over a year ago, Mr Coughlan bought five old shipping containers and converted them into a range of businesses along the seafront.

Rob Coughlan, owner and manager of the Boatyard in Cobh

Following the Boatyard's launch, Mr Coughlan began posting on social media, giving customers an unfiltered account of the costs it takes to transform his containers.

In one such video focusing on his beauty salon, adding together the price of delivery, carpentry, electrical work, windows, plumbing, fabrication and equipment, along with the container itself, Mr Coughlan paid €8,235, adding that he planned to make up to €16,000 a year by renting it out to technicians.

In a similar video, Mr Coughlan lists out all the costs of his fish and chips shop, Hook'd, which total more than €22,000.

Speaking to the Irish Examiner, Mr Coughlan says "It's very hard for someone on the outside to see what it actually takes to set up a business. I want to show people who are thinking of setting up their own the process involved and what they can expect."

'Nothing to Hide'

Mr Coughlan also added that such transparency helps customers understand how prices are set, adding that he believes businesses should be more open about their costs.

Mr Andrews agrees, adding, "More businesses should be doing these things. Someone has to break the barrier, and it looks like very few are prepared to do it. 

"I have no problem doing it as I am happy to justify all of my costs. We're not hiding, and we're happy to share."