Charlotte Varcoe
RISING power bills is pushing local businesses to their limits with Sugar and Spice and All Things Nice owners wondering what to do next.
First purchasing the business 10 years ago, Sugar and Spice owners Tanya and Victor Wearne transformed the cheesecake shop into a traditional, homestyle patisserie.
Since taking over, the business had won a multitude of awards including South Australia’s Best Mince Pie just six months ago.
Despite the success, the ongoing cost of living crisis and climbing power prices has put the pinch on the owners with Mr Wearne worried employees or quality of products may suffer.
According to a letter provided to a number of Members of Parliament, in June 2023 the business’s energy costs were 40.850c/kwh with current costs now at 53.774c/kwh – a rise of 25 per cent in six months.
“We have been taking pride in what we do and we only want to invest and keep the cost down as much as possible,” Mr Wearne said.
“It is getting harder and harder and going forward we are going to have to look at that.”
Previously, Mr Wearne said he would only have to budget for the popular store once a year, yet now he was budgeting every quarter due to ongoing costs.
“Prices are changing that quickly for ingredients and stuff keeps going up,” he said.
“Just last month the box of fats went up again by about $20.
“Before the Covid-19 pandemic it was $35 a box and now it is about $92.”
Mr Wearne said although the store’s biggest cost was labour such as any other business, ingredients and power bills were also taking a toll.
“10 years ago our power prices were about $9000 a year and now it is about $34,000 which is more than triple the original cost,” he said.
“Moving forward we have obviously got some choices to make and we might have to keep putting up the prices until we lose customers and when we lose customers people could lose their jobs.”
Mr Wearne said the business had no debt which was lucky yet still had to turn a profit.
“If we cannot do that, the first thing that goes is people’s jobs,” he said.
“I am not sure what else the government can do as they have gone so far down the rabbit hole with shutting power stations and getting rid of coal and I do not know when it is going to end.”
Mr Wearne said solar power was also not a viable option for the business after being quoted 16 kilowatt solar panels on the roof which would cost about $25,000.
“We start the ovens at 4.30am when it is dark and most of our baking is done before daylight,” he said.
“I do not know what we are supposed to do about that and we have been quoted that it will be about 30 per cent efficient.
“Then when we vacate the premises we have to take them all off and repair the roof to how it was, which is another bit of red tape the government should be looking at.”
In the meantime, Mr Wearne said purchasing cheaper ingredients was their first option despite concerns around quality of product.
“I do not really like to do that because 95 per cent of our stuff is Australian made and we get more and more representatives to come and push cheaper products on us,” he said.
“I think we are just going to have to go down that path and if we lose a bit of quality and some customers we may have to bite that.”
Mr Wearne said although there were difficulties he faced now he was not concerned about the future of the business.
“We are not too worried about the future of the business because the quality we keep up, we do everything 100 per cent from scratch, the flour comes in on a truck and goes out the front as a product that is all handmade,” he said.
“I think that will keep us afloat but I am pretty sure there will be a decline and that is a shame.”
Mr Wearne said other issues such as the cost of living for customers was impacting the business with many “not purchasing luxuries” anymore.
“People would not buy luxuries or spend $50 on a birthday cake anymore,” he said.
“They have to bite the bullet and buy a packet mix and make it themselves but we do like to think birthdays happen just once a year so it could be a bit of a treat.”
Mr Wearne has also researched other possible solutions including changing power companies to a not-for-profit business.
Member of the Legislative Council Ben Hood – who Mr Wearne spoke to regarding the issue – said power prices were “killing small businesses” across the region.
“Our businesses are struggling not to mention the payroll costs, the costs of doing business but then chuck power onto that – which is something every business needs to have – our governments simply are not doing enough,” Mr Hood said.
Minister for Energy and Mining Tom Koutsantonis was contacted for comment.
