According to industry experts, the economic shocks of COVID, Brexit, and the war in Ukraine have exerted prolonged pressure on firms, particularly those in the entertainment industry, and the energy crisis may be the final straw.
Many pubs and breweries across the United Kingdom will be forced to close unless they obtain additional energy assistance, industry leaders have warned.
In a new analysis conducted for the British Beer and Pub Association (BBPA) by Frontier Economics, it was determined that pubs and brewers would incur an average loss of 20% if energy bills returned to their normal rate in March, following the conclusion of the government’s bill relief scheme.
It demonstrated that energy costs pose the greatest threat to the company’s existence and “would be even more fatal” when the assistance program expires.
This is in addition to cost inflation in other areas of the company, such as food and beverage, critical commodities, and wages.
Gemma Gardener, the proprietor of The York Hotel in Morecambe, stated: “Not only are our energy bills exorbitant, but our supplier has also introduced new charges not included in our usual rates, such as a £2,000 installation fee and a doubling of our daily hire rate.
We attempted to switch suppliers but were denied, and the only reason we are still in business is that our pub company is assisting us.
“We’re having trouble paying our expenses, but so are our consumers, so we’re being squeezed from both ends.
We have begun serving free food to entice consumers to purchase beverages.
BBPA chief executive Emma McClarkin stated: “Pubs and brewers cannot wait for a long-term certainty that energy rates and contracts will be fair and reasonable come spring.
This research illustrates the peculiar situation in which our industry finds itself, sensitive to cost inflation throughout its entire supply chain, acutely aware of falling consumer confidence, and desirous of avoiding price increases for suffering clients.
Persistent pressure
Tim Black, associate director of retail and consumer for Frontier Economics, stated: “Recent economic shocks, such as COVID, Brexit, and the conflict in Ukraine, have exerted persistent pressure on firms.
“Our data reveals that the pub & brewery industry faces a mix of rising prices – principally energy, but also raw materials and wages – and dropping demand, as consumers cut down on spending in response to severe cost-of-living constraints.
The basic economics of the sector makes it exceedingly difficult for enterprises to absorb these shocks, and many will struggle to survive.
