Many pubs and breweries across the UK will be forced to shut their doors for good as they face rocketing losses without further energy support, industry bosses have warned.
In a new report by Frontier Economics, produced for the British Beer and Pub Association (BBPA), calculations showed that energy bills returning to their regular rate after March would put pubs and brewers at a loss of 20% on average.
Businesses have benefited from the energy bill relief scheme but face uncertainty when the scheme finishes at the end of March.
The report showed energy costs are the biggest threat to their viability and “would be even more lethal” when the relief scheme ends.
This comes on top of cost inflation across other parts of their businesses including on food and drink, key commodities and wages.
Gemma Gardener, who runs The York Hotel, a pub with rooms in Morecambe, said: “Not only are our energy bills extortionate but our supplier has also added on extra unexpected charges outside of our standard rates as well, from a £2,000 installation fee to doubling our daily hire charge unexpectedly.
“We have tried to switch suppliers but been rejected, and the only reason we’re able to keep going is because our pub company is helping us through.
“We’re struggling with our bills but so are our customers as well and so we’re being squeezed at both ends.
“We’ve even started offering free food to encourage customers to come in and buy drinks.”
Emma McClarkin, chief executive of the BBPA, said: “A long-term guarantee that energy costs and contracts will be fair and reasonable come the spring cannot come soon enough for our pubs and brewers.
“They are planning now for the months ahead and need assurance that bills won’t rocket and completely wipe out profits.
“This report demonstrates the unique position our sector finds itself in, vulnerable to cost inflation across the entirety of its supply chain and acutely conscious of declining consumer confidence and wanting to avoid increasing prices for struggling customers.”
Tim Black, associate director in Frontier Economics’ retail and consumer, said: “Recent economic shocks of Covid, Brexit and the war in Ukraine have put sustained pressure on businesses.
“Our analysis shows the pub & brewery sector is facing a combination of surging costs – primarily energy but also raw materials and wages – and falling demand, as consumers reduce their spending in the face of severe cost-of-living pressures.
“While there are different impacts across businesses and uncertainty on the outlook, the underlying economics of the sector makes absorbing these shocks incredibly difficult – and some firms will struggle to survive.”