Licensee of the Dog at Wingham, Canterbury, Marc Bridgen said soaring costs could put pubs out of business as operators have been asked to sign two-year contracts with energy suppliers they cannot afford.
The operator explained the Dog’s utility contract is due to expire in October with the pub having been quoted some four and a half times higher for gas and two and a half for electricity, resulting in an overall increase of around £60,000 per year.
In his email to multiple MPs dated Monday 20 June Bridgen wrote: “With the current economic climate we are forecasting a small profit to breakeven year as it is and the utility bill could be the final nail in the coffin.
“I don't know what our business and many others are going to do to survive.”
Perfect storm
However rocketing energy costs are not the only challenges faced by hospitality, food prices have also continued to increase to “apocalyptic” levels, according to Bank of England Governor Andrew Bailey.
Bridgen stated the Dog had recently seen the cost of tomatoes increase by 100%, chicken 60% and cooking oil 50% while the cost of linen services soared by around 12% and alcohol as much as 15%.
He added: “We all know about households and the challenges they're up against, which means our footfall and our revenues are under pressure.
“We're already in a perfect storm, a lot of that you can absorb, they're normal pressures of business, [but] we're arguably coming into a recession.
“There's always inflationary challenges and margins under attack, [but] when you then add something as extreme as what we're seeing in the utility market, it's very difficult to absorb them all.
“I'm not alone, this is affecting everyone. There's going to be a lot of hospitality casualty.”
Furthermore, Bridgen stated without Government intervention for businesses, the impact on households would be greater as business closures mean job losses.
Push for hospitality
He said: “What the Government did to support hospitality at the end of Covid, when they reduced the VAT rate, that might be an answer [and] something to help us.
“To put it into real terms, how do we grow our revenues by more than £5,000 a month, probably about a 5% increase roughly, that's not easily done for any business, particularly in in a recession.
“It's probably more likely revenues are going to be shrinking or tightening, the fact that you've got to try and increase them by 5%, just to cover your increased utilities, when you sit down and say it out loud, you can see how challenging this is.”
Additionally, Bridgen explained “being honest about the challenges” faced by the industry was important for customers to understand why menu prices have increased as well as more operators writing to MPs to “push” for the sector.
He added: “We just need more people talking about [this], let's push it for hospitality, it needs pushing further.”
