The founder of the popular E5 Bakehouse says the business could be under threat after it was walloped with a sharp rent increase.
The bakery, which has been stocking the bread bins of local residents and restaurants for 10 years from its base inside a London Fields railway arch, is facing a 50 per cent rise.
Ben Mackinnon, who set up the business in 2011, said: “It’s a pretty aggressive increase. Seeing such challenges to the business and a drop in turnover, [we wonder] whether or not we can survive and make it work.
“Making really good food is always a profitable enterprise, and we’re using the best ingredients and paying people appropriately.”
The bakery’s premises was sold by Network Rail to the Arch Company two years ago.
The rent levels are reviewed every six years, but Mackinnon was not expecting to be hit with such a dramatic hike.
He said: “Increasingly, high streets are not being enormously successful and shopping is shifting to online.
“Is that really where we want to go? And should we therefore be defending rents to be at a more ethical and nuanced rate, to support independent businesses?”
Now, E5 bakehouse is fighting to keep its rent down so it can continue to serve the local community.
Through a process of arbitration, Mackinnon hopes that he will be able to prove that the rent rise brings the price of the property out of line with the norm for the area.
Current landlord The Arch Company says the process of agreeing a rent price is nuanced, and that there are options available to long-standing businesses who cannot afford it.
A spokesman for the company said: “We are in early discussions with E5 Bakehouse about their new rent level and hope we can reach an agreement that keeps them at the heart of the local arches community.
“Market rates have increased significantly in London Fields since 2015, in line with the demand in the area.
“But we are committed to work with long-standing, small, independent businesses if they can’t afford the market rent level – for example, by offering them a stepped rent with more gradual increases over time.
“We have provided financial support during Covid-19 to 1,450 businesses, including E5 Bakehouse, which has helped occupancy of the arches remain stable despite the pandemic, protecting the jobs of over 25,000 people employed within them.
“We are committed to keeping the diverse mix of small- and medium-sized local businesses that make the arches special.”
The firm says it has overseen an increase in occupancy of the London Fields arches since it took over – from 75 per cent of units filled in 2019 to 88 per cent this month.
E5 Bakehouse came from humble beginnings. Mackinnon started out by knocking on doors across the borough with samples of his bread, offering to deliver on Saturday mornings.
By doing this he established a loyal customer base of around 20 households. Since then, the business has grown and currently employs around 100 staff.
The bakery is committed to being as ethical and sustainable as possible. It is a London living wage employer, uses renewable energy, and increasingly sources flour from UK farms, with a view to exclusively using UK wheat.
Mackinnon stressed the importance of local business in Hackney, adding that the Bakehouse had become an established and valued part of the neighbourhood over the last decade.
The bakery is also part of the tenants’ association Guardians of the Arches, an organisation founded in Hackney which fights the ever more prevalent issue of rent increases in railway arches.
“The social value of businesses like ours which have a presence, a place for people to stop and form a network of community, [is important],” said Mackinnon.
“That’s really not being recognised and supported.”