New research shows that less than a third of UK hospitality businesses are optimistic for their futures this year due to continuing and ongoing high energy prices and now rising food costs too.
Despite government support from the Energy Bills Discount Scheme (EBDS) many pubs, bars and restaurants have seen their energy prices rising by an average of 81% over the past 12 months on top of rising food bills and wages.
Coupled with the increasing upward pressure on domestic bills for their customers and even though we’re in the summer months – the outlook looks cloudy for a lot of hospitality firms.
Food and beverage services – business insolvencies 2019 to March 31 2023
|Number of insolvencies
|Jan to Mar 2023
Insolvencies for food and beverage (hospitality) businesses were 39% higher in 2022 than in the pandemic affected years of 2020 and 2021.
March 2023 alone saw 308 insolvencies for food and drink businesses which was the highest individual monthly total since January 2019.
If the sector continues to follow this trajectory for the rest of the year then there would be over 3,200 insolvencies – 27% higher than 2022 and more than double the entire total of 2020 and 2021.
Russia’s invasion of Ukraine in February 2022 saw wholesale gas prices skyrocketing, however new data shows that they have now dipped to their lowest level since the conflict started.
However, as retail prices continue to stabilise and with some pubs and restaurants being bound by long-term fixed rate contracts, only 29% of business owners in the hospitality industry 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 joint 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.”
Statistics from the Insolvency Service also shows that more than 150 pubs have disappeared for good from English and Welsh communities over the first three months of 2023 alone which represents a 60% jump on levels from last year.
Even with energy support, the pressure on pubs from other sources will make future trading untenable for a lot of them unless they receive even more help and support.
A statement from the government said: “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 £13.6 billion business rates relief package and a £2.4 billion fuel duty cut.”
If you are a bar owner or manager, and you are struggling financially, don’t hesitate to seek help. There are many resources available to help you turn things around.
They’ll work with a dedicated expert advisor who will let them know what options they have and how they can implement them quickly and efficiently to help their business during these unprecedented trading times.
The sooner you get in touch, the sooner you can implement options that will hopefully make things easier for you and allow you to enjoy a brighter few months this summertime.