Business

Only a third of hospitality firms optimistic about their future – as average energy prices rise by 81%

Only a third of UK hospitality businesses are optimistic about their future due to high energy prices and rising food costs, industry bosses have warned.

Pub, bars and restaurants say their energy prices have surged an average of 81% over the past year, on top of rising food and wage bills.

Wholesale gas prices, which rocketed following Russia’s February 2022 invasion of Ukraine, have dipped to their lowest levels since the conflict started.

But with retail prices still falling back into line – and with some pubs and restaurants locked into long-term fixed rate contracts – hospitality bosses say just 29% of businesses say they feel optimistic about the next 12 months.

They say that pubs, bars and restaurants have been at “breaking point for a year now” and warn venues will shut for good if cost pressures do not ease soon.

Four of the UK’s largest hospitality industry groups – the British Institute of Innkeeping, UKHospitality, the British Beer and Pub Association and Hospitality Ulster – have issued a plea to the government for more support.

In a statement, they say: “The Energy Bill Relief Scheme has provided a short respite but with that falling away last month businesses are back to paying high costs, with no end in sight for the thousands locked into contracts who will be obligated to pay extortionate rates well into next year.

“The government must recognise this crisis isn’t just crippling businesses now.

“Left unresolved it will have a lasting wider impact long into the future, impacting local employment, supply chains and removing essential community hubs from villages, towns and cities across the whole of the UK.”

It comes as data collected by CGA by NielsenIQ on behalf of the groups reveals that 86% of hospitality firms are worried about energy costs going forward.

Last month, analysis of official Government data by the commercial real estate specialist Altus Group found more than 150 pubs have disappeared for good from English and Welsh communities over the first three months of 2023.

This represents a 60 per cent jump on levels from last year.

“Put simply, this data is extremely worrying for thousands of otherwise viable hospitality businesses,” the groups say.

Read more:
Number of restaurants entering liquidation up by almost 50%
Pubs and restaurants cut menu items as inflation pressures mount

The government announced its Energy Bill Relief Scheme – which provides a discount on gas prices for businesses – in October last year.

The scheme, which the government says saved businesses a total of £6.9bn on energy costs, was due to expire in March.

However, it was renewed as the Energy Bill Discount Scheme in January to help businesses, including those signed up to expensive longer-term deals.

The new scheme – which offers a lower level of support than the previous one – is due to run until March 2024.

A government spokesperson said: “Global energy prices have fallen significantly and are now at their lowest level since before Russia’s illegal invasion of Ukraine.

“The new level of government support reflects this welcome fall in prices, but we will continue to stand by businesses.

“We are also assisting the hospitality sector with support such as freezing of alcohol duty, cutting energy bills, a £13.6billion business rates relief package and a £2.4billion fuel duty cut.”

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