In light of landlords’ claims that gas and electricity rates have increased by 300%, a brewery executive has warned that rising energy costs would force pubs to shut and are eroding earnings.
Rising energy prices are putting small companies in a dilemma by increasing operational expenses and making it hard for some owners to stay in business.
Six of the largest pub and brewing firms in the UK called on the government to take immediate action to prevent “real and significant irreversible” harm to the industry in an open letter published today.
This may include establishing an energy price ceiling for companies, similar to the one now in place for consumers.
St. Austell Brewery’s chief operating officer, Andrew Turner, said today that he had spoken to a renter whose energy costs had increased by more than 400% in the previous week.
“Unlike consumers, small companies don’t have an energy price ceiling, therefore we are witnessing spiraling expenses for our tenants, bars, and breweries,” he said in an interview with Sky News.
It completely wipes away the earnings they are now generating, raising the issue of why on earth they would continue to open their doors.
Sasha Lord, Greater Manchester’s nightlife economy adviser, also issued a warning today, stating that seven out of ten pubs would not survive the winter without help from the government to reduce rising costs.
Darren Nash (right), landlord of the Red Lion pub in Cricklade, Wiltshire, has detailed the soaring energy prices he now faces
Emma McClarkin, chief executive of the British Beer & Pub Association, also joined calls for financial support to give pubs ‘essential headroom’
Earlier this month, patrons sipped beer at the brewery’s pub at east London’s Signature Brew.
We’re simply desperate, he said, according to LBC. Bank holiday weekend should have been a time for relaxation, but instead the whole UK is gripped by dread, worry, and tension. The fifth-largest industry is us.
“Our current situation is far worse than it was during the epidemic.” There was at least some assistance back then. Just now, we were freewheeling toward a rock face.
“There will come a day when it is too late.” If nothing is done, seven out of ten bars won’t make it through the winter.
Operators could be faced with out-of-control energy expenditures if the price of gas continues to rise if there is no small business alternative to the consumer price ceiling.
In order to avert the possibly “catastrophic” scenario, Mr. Turner has urged the government to exercise more leadership.
“Right now, it seems like we are sitting in the void, with no major leader at the top to make choices,” he concluded.
“We need the Government to step up and make choices, to assist our industry, and to ensure that such a cornerstone of UK business can get through this difficult period,” the petitioner said.
The King Charles I pub in north London anticipates a rise in energy costs of around 400%, even though it is already paying about 12% more per barrel of beer than it did a year ago.
Paul Butler, one of the pub’s directors, said that, despite their confidence in their ability to survive the next months, “it’s going to be a bit of a squeeze.”
The brewers are undoubtedly seeing the same increases that we are, according to Mr. Butler. Additionally, they are experiencing expense hikes in the price of grain, which are passing on to us.
We have cost challenges, which affect not just our own personal heating and lighting costs and other expenses, but also our suppliers.
We’re going to attempt to pass some of the increases on to our consumers, he said, but I doubt we can do so entirely.
I doubt that our consumers would be able to tolerate a 15% increase in the price of a pint or a glass of wine.
Mr. Butler said that he wanted to maintain the pub’s “community spirit and environment,” adding, “I don’t want to price people out of the market.” I’d rather maintain turnover than raise their pricing to the point where we lose that environment.
The Red Lion pub’s owner, Darren Nash, of Cricklade, Wiltshire, also spoke about the rising costs he is now dealing with.
In an open letter, bosses of six of the UK’s biggest pub and brewing companies called on the Government to act now to avoid ‘real and serious irreversible’ damage to the sector
The fermentation tanks at Exale Brewing and Taproom in east London earlier this month as reports indicated that pubs around the UK were in danger of closing.
In the next six months, he predicted that gas and electric prices will rise by 250 to 300 percent. We now spend, give or take, £2,000 per month on energy; this will increase to, say, £1,000 per week.
“Covid was difficult, but I don’t believe it was as difficult as what is to come.” At least under Covid, we could still order takeout and do other things of that kind, but it is no longer within our control. It is due to pricing that are much more than ours.
The British Beer & Pub Association’s chief executive, Emma McClarkin, supported the requests for financial assistance to provide pubs with “necessary headroom.”
“We are desperately calling for action from the government to give us an energy cap for small businesses and to do a long-term plan with hospitality,” she said. “By making sure they are taking action to give them essential headroom like cutting VAT, business rates, and keeping beer duty low, we can save pubs and brewers at the heart of our communities.”
The urgent alert was issued by St Austell Brewery, Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, and Drake & Morgan.
The government will continue to help the hotel industry as it navigates the next months, despite the reality that no government can control the global dynamics driving increasing energy prices and other business expenses.
Separately, a group of over 750 takeout business owners wrote to the government pleading for immediate assistance to stop a wave of closures.
The British Takeaway Campaign is urging a reduction in VAT, subsidies to assist with energy costs, tax breaks, and a crusade against red tape that burdens smaller operations.
Gas prices that have spiraled out of hand since Russia’s invasion of Ukraine have been a major factor in operators’ soaring energy costs.
The government regulator Ofgem stated on Friday that when the new price limit goes into effect in October, bills for the typical UK home would increase by 80%.
However, there is no set limit on how much companies may charge. Some bar owners have expressed concern that their costs have doubled or that they are having trouble finding suppliers who would provide electricity for their establishments when their contracts are up for renewal.
According to Nick Mackenzie, chief executive of the 2,700-strong Greene King pub business, one tenant’s annual energy cost increased by £33,000.
Without prompt government support for the industry, he warned, “We could face the possibility of pubs being unable to pay their bills, jobs being lost, and beloved locals across the country being forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be for nothing.”