‘Thousands of pubs could close over soaring utility bills’
Regency Purchasing Group has said the sector is now in the middle of a ‘perfect storm’ amid rising costs.
Earlier this year (June), one operator told The Morning Advertiser she had to give up her pub as a result of increasing energy and operating costs.
Regency Purchasing Group managing director Alex Demetriou said: “Until recently, a typical pub was spending about £2,000 a month on utilities but businesses renewing their contracts are seeing their monthly costs increase to about £7,000.
“That is an extra £60,000 a year on utility bills alone. Many village and community pubs do not make £60,000 profit in a year so the utility bills crisis alone is the difference between making money and losing it.
“In addition, pubs that serve food are either seeing further challenges with not being able to recruit the staff they need, forcing them to close their kitchens, either for several days a week or in some cases, closing them entirely.”
Bleak picture
A number of the group’s members are looking to close their businesses when utility contracts are up for renewal later in the year, according to Demetriou.
He added: “It’s a bleak picture today with the number of businesses that have closed or are struggling, but the situation is set to worsen further with hundreds of businesses now forward-planning their closures in line with forthcoming utility renewals.
“Unless the Government intervenes, I expect hundreds of hospitality businesses to close by the end of this year and it could be thousands within a few years.”
The procurement group director outlined how across the water, there is a system in place that helps residential and business energy customers.
Collective approach
“The price cap in the UK is used by OFGEM to protect the consumer, not businesses,” Demetriou said.
“A lot could be learned from France, where there is a Tarif Shield, which protects both private and professional consumers from excessive increases in utility bills.
“The news and media website Vie Publique says this tariff limits increases to €38 per year for private customers and €60 per year for professionals.
“Without these measures, the regulated tariff would have risen by €330 per year for private customers and €540 per year for professionals.
“Our whole country runs on utilities and it’s going to take a collective approach to ease the growing pressures on businesses, but that approach has to start with some significant Government intervention.”
This follows a report from trade body UKHospitality and agents Christie & Co, which found operating costs were now at more than half of hospitality businesses’ turnover.
Utility costs saw the sharpest hike of the operating costs – rising two percentage points to 5.1% for the period covering the second half of 2021 but, the report noted this does not reflect the full extend of the current energy crisis, where many businesses having reported rocketing energy prices of more than 100%.
