Despite several tumultuous years caused by Covid-19 restrictions,, U.K. restaurants continue to face a battle for survival amid soaring food, energy, and materials costs.
U.K. businesses expect a 101 percent increase in energy bills in Q1 2023 compared to the same period last year, according to a quarterly survey released by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and Hospitality Ulster.
Energy suppliers have been inflating quotes without justification, with 56 percent reporting higher standing charges, UKHospitality Chief Executive Kate Nicholls said at a BEIS Strategy Committee session in early February.
Higher energy prices are “significantly affecting” restaurant's profit margins, UKHospitality and the other organizations said. More than 1,600 hospitality businesses closed in the last quarter, according to the three organizations, and of those that survived, forty-two percent have reduced opening hours and 34 percent have cut back on the number of days they are open.
“Hospitality businesses and representatives have consistently warned that the exclusion of the sector from additional energy support means venues are facing unsustainable hikes in their energy bills. The dramatic increases we are seeing in energy prices shows the desperate need for support and investment in hospitality, if our sector is to survive the current crisis and go on to deliver consistent economic growth, create jobs, and reinvest in our local communities," the organizations said. “These survey results reinforce those warnings, demonstrating the extent of this energy devastation on venues with bills set to almost double as a result of support significantly reducing. Arriving on top of the 101 percent increase compared to this time last year, the hit to the sector could not come at a worse time.”
National Federation of Fish Friers President Andrew Crook, owner of restaurant Skippers of Euxton in Lancashire, U.K., said ballooning energy costs topped his list of concerns.
“I have members who are on extortionate rates for energy and that needs addressing,” Crook said. "Businesses don't have the ability to move suppliers as domestic users are allowed to enjoy. We have businesses that have not had the correct level of support applied to their energy rates, too, and many will not even be aware.”
U.K. restaurants, particularly fish-and chip-shops, also also been hit with substantial price increases on ingredients, including for cooking oil and seafood. Their fish supplies were affected by U.K. sanctions on Russian seafood as part of the government's response to Russia's invasion of Ukraine in February 2022. In mid-March 2022, the U.K. placed a 35 percent tariff hike on Russian whitefish. Around 30 to 40 percent of filets used in fish and chip shops are of Russian origin, Crook said, and “a lot” of Russian-caught fish is used in processing and for value-added products in the U.K.
U.K. Fish-and-chip operators have tried to cushion consumers from increased costs by absorbing some of the increases, Crook said. They've been buoyed by a slight drop in cod prices and a large drop in haddock prices recently, but Crook said he expects fish prices to rise again.
“We are advised this is temporary,” Crook said. "We are looking at some alternative species, too, which works in some cases but not everywhere.”
As a result of overall higher seafood costs, fish-and-chip shops are increasing sales of other proteins, including chicken and sausage, according to Crook.
Hospitality businesses are “hamstrung by loans they took out during the pandemic, unlike many of our European counterparts that benefitted from grants,” Nicholls said in a separate press release responding to the IMF’s projections for global economies this year.
“The indebted nature of the sector needs urgent attention,” Nicholls said. She urged U.K. Chancellor of the Exchequer Jeremy Hunt to direct banks to allow an extension of loan-repayment terms by 10 years to relieve stress on business cashflow.
“Implementing the right measures now can see the sector survive current challenges and also allow it to thrive into the future, delivering much-needed economic growth and job opportunities,” Nicholls said.
U.K. small-business owners are ready and willing to play their part in economic recovery, Crook said.
“We are used to getting stuck in and rolling our sleeves up but we need to be given a glimmer of hope that government [is] listening to the entire sector. When the government is ready to announce a plan for growth, I hope the culturally important hospitality sector features and is given the headroom to continue to provide confidence building quality jobs," he said. "We want to play our part."
Photo courtesy of UKHospitality
