Cost of living: half of pubs, restaurants and hotels passing rising energy costs and inflation on to customers
Pubs and other hospitality businesses are struggling with energy costs and inflation - and consumers are paying the price
Half of UK restaurants, pubs, hotels and other hospitality businesses are passing costs on to consumers as they try to mitigate steep rises in energy prices and general inflation.
It comes as the latest official inflation figures showed Brits were having to fork out more for alcohol, or to eat and drink out.
According to a survey of businesses by the Office for National Statistics (ONS) between 4 and 17 April, 50% of UK accommodation and food service businesses said they had to pass on price increases to customers – more than any other industry.
The figure has risen by 12 percentage points in one month, up from 38% in early March.
It was the worst-hit sector, with 29% of businesses surveyed overall saying they had passed price rises on.
Accommodation and food service was also the industry worst affected by energy price increases specifically, according to the survey, with 56% reporting that rising energy costs have had an impact on either their business production, their suppliers, or both.
That compared to 29% of businesses as a whole.
The latest Consumer Price Index (CPI) inflation figures from the ONS, published earlier this month (13 April), shows the retail price of alcoholic beverages for consumption at home was up by 2.5% in March compared to last year, with beer prices up 2%.
The cost of dining out or drinking at restaurants, bars, cafes and other venues meanwhile was up by 6%, while accommodation prices were up by 11%.
It follows warnings from hospitality trade bodies that energy costs, rent increases and the rising of VAT back to pre-Covid levels was dealing a “cruel blow” to businesses as they tried to rebuild and tempt customers back after the pandemic.
In March a joint poll by UKHospitality, the British Institute of Housekeeping, The British Beer and Pub Association and Hospitality Ulster found 76% of hospitality businesses were mitigating soaring energy costs by reducing their usage and raising prices, while over a third (38%) had cut trading hours.
The poll involved 300 businesses operating 6,000 venues between them.
The British Beer and Pub Association had previously warned that pubs were being refused energy contracts from suppliers, placing them under additional financial pressure as they try to recover post–pandemic.
Speaking in March, chief executive Emma McClarkin said: “Struggling publicans that have managed to keep their heads above water throughout the pandemic now face a further financial hurdle that threatens the viability of their businesses and the ability for the sector to recover.
“The pub and brewing sector is at a pivotal point in its recovery and the erosion of margins is impossible to sustain.”
Overall four out of five (81%) of accommodation and food service businesses told the ONS they had concerns about their business in early April, compared to 70% of businesses across all sectors.
Energy price rises were the most common challenge cited by the accomodation and food service sector, followed by general inflation and taxation.