‘Graver crisis than Covid' for hospitality businesses amid 300% energy price hikes
Business leaders from across the brewing and pub industry have signed an open letter to the Government and Conservative leadership candidates warning small businesses will close and jobs will be lost if immediate action isn't taken on rising energy bills.
The letter warned that pub and brewers across the UK were at risk of closure due to "out of control" energy bills, with upwards of 300% price hikes reported and some energy companies refusing to supply pubs.
Representatives from JW Lees, Greene King, Admiral Taverns, St Austell Brewery, Drake and Morgan and Carlsberg Marstons, who make up the board of the British Beer and Pub Association (BBPA), said that without relief for businesses, many jobs and livelihoods will be lost in the coming months. They warned of the "real and serious irreversible" damage the energy crisis will cause if the Government does not implement an urgent support package that effectively caps the price of energy for businesses.
At the same time, major CO2 producer CF Industries has announced it will be ceasing production.
Kevin Georgel, chief executive of St Austell Brewery, said one tenant was quoted a 417% increase on a one-year fixed price deal for energy.
"It's unsustainable for publicans to run their businesses in this climate and increases of this scale will more than wipe out the entire profits of the business," he said.
"We are now hugely concerned on behalf of our licensees, who are paying extortionate fees for their energy, and many remain in unsustainable out of contract rates. Some are finding it impossible to find an energy supplier that is willing to provide a contract for a pub."
Jillian MacLean, founder and chief executive of Drake & Morgan, said swift government intervention and an urgent price cap on energy like households was needed "to ensure the survival of businesses and the retention of thousands of jobs".
Paul Davies, chief executive of Carlsberg Marstons, said: "The UK's brewing industry is facing a crisis far graver than that which we faced during the Covid lockdowns of the past few years. We have seen surging commodity prices and a doubling in the cost of malt, as well as C02, gas and energy costs nearly tripling since 2019.
"On top of all this, our industry has felt the impact of an over 50% rise in aluminium costs for cans, plus rising labour costs. Without immediate, direct Government support, many of the UK's craft and cask ale breweries will have no choice but to close for good. We are going to lose in one winter, generations of iconic beer brands."
Chris Jowsey, chief executive of Admiral Taverns, highlighted that, for most licensees, the pub is not just their business but also their family home.
Emma McClarkin, chief executive of the BBPA, added: "This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks, consumers will now be thinking even more carefully about where they spend their money. There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers."
Michael Kill, chief executive of the Night-Time Industries Association (NTIA) said that the billions of pounds of public funding spent during the pandemic on the sector could be "wasted" if the Government cannot get a handle on inflation. He said that energy bills had increased by over 300% for more than 80% of businesses within the night-time economy.
"The current climate would see this crisis take more businesses to the point of failure than the pandemic," he said.
Separately, hundreds of independent takeaway owners have written to the Government and leadership candidates today to plead for support.
In an open letter backed by the British Takeaway Campaign, more than 750 restaurant and café owners have urged the Government to take immediate action to ensure they're able to keep their doors open.
They have said the Government must take the following measures:
- Cut VAT to reduce the cost of energy and keep food affordable for customers
- Provide grants to small businesses to cover the immediate cost of energy bills
- Provide business rate rebates and greater forbearance from HMRC in agreeing repayment plans with commercial taxpayers in arrears
The group said restaurants could not afford to wait another month without practical and financial support, with many of the restaurants the British Takeaway Campaign supports, including some owned by the campaign's board members, having shut down in recent weeks.
Ibrahim Dogus, chair of the British Takeaway Campaign said: "The Government has waited until the last moment to act before, but now cannot be one of those times. It must work with the Conservative leadership candidates on a plan to support Britain's smallest restaurants before it's too late. Restaurants are going bust every single day, and the hundreds that have signed this letter, and the many more the British Takeaway Campaign represents, don't want to be another boarded up shop."
David Fox, co-founder of Tampopo restaurants, took to Twitter to detail the seriousness of the energy situation for hospitality businesses. He said that in two years, the electricity bill at one of his restaurants had risen from £325 to £1,200 per week last year. Ahead of the contract being up for review in September, he said the venue was being quoted £3,557 per week.
"That is £508 a day. This will call into question the affordability of running a restaurant and certainly on shifts where sales are below a certain level," he said.
The Institute of Hospitality has also written to business secretary Kwasi Kwarteng to ask for support around soaring energy costs to avoid venue closures and job losses.
Image: Gokhan, Shutterstock
