MITCHELLS of Inverurie has long been a fixture on the North East’s retail and hospitality scene, popular as much for the scones it serves in its tearoom as the oatcakes on sale in its shop.

And it is not just the locals that appreciate its wares. Founded in 1928 by Elijah and Agnes Mitchell and now run by their grandson Patrick as well as his daughter and son-in-law Judy and Keith Whyte, the business has been the recipient of many awards, including the rural category at The Herald Family Business Awards in 2015.

But, with its rates bill set to increase from £33,660 to £43,050 in April, adding almost £800 to its monthly overheads, Ms Whyte said that in the current economic climate the future of the business could be in jeopardy.

“We’ve noticed a big downturn in trade in the last 18 months as a result of the local economy,” she said.

“We’re already operating with falling sales and customer numbers and last year we had to enrol our employees into statutory pensions - because of the economic climate we had to adjust and reduce staff hours to fund that increase in the wage.

“We’re faced with so many overheads and I don’t see how we can trade up to meet them.”

In addition to the rates rise, Mitchells’ electricity provider has given notice that it is increasing its tariffs by 20 per cent while the business will also be affected when the minimum wage goes up from £7.20 an hour to £7.50 in April.

Ms Whyte said all options are currently being explored to cut costs, including raising prices, reducing opening hours and hence wages, and even sub-dividing the shop to both cut Mitchells’ rateable value and generate some rental income. None are appealing, however.

“Every time we cut something that reduces our competitiveness and we can’t justify spending the money on [renovating the shop] unless we know we would definitely get a tenant,” she said.

“We’re exploring all the options we can so we can continue in business but we’ve got no buffer.”