Business is booming.

Pubs and restaurants fear closing thanks to rising energy bills

Hospitality and leisure businesses are increasingly concerned about the energy price crisis, with as many as a quarter of bosses thinking of stopping shopping in the next 12 months, a new survey shows.

More than three-quarters are considering shorter opening hours to tackle rising energy bills, according to research by eEnergy and Censuswide.

One entrepreneur concerned about rising energy bills is Mandira’s Kitchen, an Indian cafe in Surrey Hills.

Owner, Mandira Sakar, said utility bills are likely to more than double in the coming months, leaving her “terrified.”

Wasted energy: Hospitality businesses with poor energy efficiency waste a fifth of their energy consumption, but only a quarter want to make energy efficiency improvements

Wasted energy: Hospitality businesses with poor energy efficiency waste a fifth of their energy consumption, but only a quarter want to make energy efficiency improvements

She says prices will rise from 21p/kWh to 49p/kWh and she is concerned that this figure will continue to rise. Companies are not subject to a price cap like households.

She said, “I’m just terrified right now. It’s not like a house where you turn off the lights or decide to put on an extra blanket.

“So when a monthly bill goes from £1,000 to £3,000 for a small business like us, it’s going to have a huge impact.”

“We cook on gas, we have to make sure our walk-in freezers work, and we have commercial microwaves that use a lot of electricity. I’m just terrified right now because it impacts everything.

“We are constantly putting out fires and struggling to make sure we stay open.”

There is growing concern among companies that the long-term effects will have an even greater impact on an industry still recovering from lockdowns and supply chain challenges.

Nine in ten entrepreneurs said they did not expect energy prices to return to last year’s levels within the next 12 months.

In response, 83 percent said they had previously cut staff to cope with rising prices, or considered being laid off, or cut staff hours to cope with rising prices.

Six tips for companies to reduce energy bills

1. Track your energy consumption with a smart meter to make sure you stay within your budget.

2. Once you know how much energy is being used, consider cuts or changes, such as: more efficient devices or turn off devices when not in use

3. Swap out your small electronics, such as: Led lamps or automatic timers or motion sensor lights to save costs

4. Turn off your air conditioning whenever possible or turn down your heating with 1C to reduce up to a third of your bill

5. Invest in renewable energysuch as solar energy, or better insulation for long-term savings on your energy bill

6. Consider whether you are on the right energy rate and switching provider if you find a better deal elsewhere

Mandira has considered cutting opening hours, but says cutting costs isn’t as easy as closing the store for the day as she fights to keep her staff working.

She says the cost of living crisis is more difficult for her business than lockdowns, as she was still able to run her business despite the restrictions.

She adds: ‘As a small company we are naturally very flexible. We were very lucky during Covid as we were able to change our tactics every day.

‘Our online business grew and grew. We were really successful. This crisis, this is far beyond our control.

“You have no staff, fuel costs have gone up, God knows how much prices have gone up.

“This is beyond anything I’ve seen or experienced.

‘How can we plan catering for next year if we don’t know what our prices will be? It’s scary and worrying.

“It’s like jumping water out of a ship, a sinking ship and trying to get it out with a fork. It’s just awful.’

Companies like Mandira’s have had a hard time adapting to changes since Covid, but with prices continuing to rise, she admitted she didn’t have time to think about how to cut her energy bill.

The survey found that companies were overpaying for their energy due to poor energy efficiency.

Nearly all of the 500 companies surveyed indicated that they waste more than a fifth of their energy each year.

Shut up shop: A quarter of UK hospitality businesses are considering closing in the next 12 months due to rising costs as four in five consider staff cuts to keep their heads above water

Shut up shop: A quarter of UK hospitality businesses are considering closing in the next 12 months due to rising costs as four in five consider staff cuts to keep their heads above water

Shut up shop: A quarter of UK hospitality businesses are considering closing in the next 12 months due to rising costs as four in five consider staff cuts to keep their heads above water

With businesses likely to face increased pressures in the fall and winter, calls for additional government support to ease the pressure have increased.

A quarter of hospitality businesses said introducing better energy efficiency measures was the long-term solution, while nearly a third argued for the introduction of a government support scheme to help the sector.

Ofgem’s energy price cap only includes households, not businesses.

How do companies’ energy bills compare to those of consumers?

Unlike consumers, businesses are not subject to Ofgem’s quarterly price cap.

This means that companies are seeing their energy bills skyrocket, and the end is not yet in sight.

Currently, the price of electricity for consumers is capped at 28.11p per kWh and a daily fixed amount of 50.27p. Gas is limited to 20.46p per kWh and a daily flat fee of 29.25p.

For companies, these figures can vary depending on the contract and the amount of energy they use.

The average cost per kWh for business energy consumers is currently between 46p and 57p, with fixed costs of up to 107.6 per day for electricity.

Unit prices for gas average 19p per kWh, with daily fixed costs up to 169p.

Unlike consumers, businesses may still be able to switch providers to get a better deal.

See if you can save money on your bill by comparing business energy deals with Bionic.

As a result, energy suppliers may pass their costs on to businesses by increasing gas and business electricity costs, and if no cap is set, business utility bills could continue to rise.

Harvey Sinclair, chief executive of eEnergy, said: “The hospitality and leisure sector has played a terrible role over the past two years.

“The skyrocketing energy prices have enormously increased the pressure on companies that are still recovering from Covid.

“With many entrepreneurs considering layoffs or even closure, solutions are needed now, but we don’t have to wait for government intervention.

“Government grants to fund energy-saving solutions only have a conversion rate of 5-10 percent and for most it takes 6-12 months to make a decision, causing further delays and burning more money – and carbon.

“We believe the answer is simple: reducing energy waste and carbon should be as accessible as any other subscription service, with no upfront costs.”

Steve Alton, chief executive of the British Institute of Innkeeping, said: ‘Our members, who independently operate pubs in every community in the UK, all face exceptional business pressures and the biggest impact on their profitability has been increases in utility costs.

“As many operators struggle to turn a profit despite trading in the summer, their position is extremely fragile.

“There’s no need for corporate insolvency with the right level of support, putting our country’s pubs at the center of development and regeneration in every community.”

Crucially, the energy crisis comes at a time of increasing action on environmental issues.

Average business energy prices per kWh
Company size Annual use Electricity Gas
Unit price Fixed load Unit price Fixed load
Micro-enterprises 5,000 to 15,000 kWh 50.6 p 55.7 p 20.5 p 38.4p
Small business 15,000 to 25,000 kWh 52.0p 43.9p 16.5p 34.2p
Medium sized company 25,000 to 55,000 kWh 52.7p 44.7 p 18.5p 36.7 p
Big companies More than 55,000 kWh 46.2p 107.6 p 20.5 p 169.0p
Figures from Bionic – August 1, 2022

Nearly three quarters of hospitality and leisure companies say they have plans to reach net zero emissions, with nearly half considering installing solar panels as a solution to high energy costs and the climate crisis.

This is reflected in consumer trends, with the same Censuswide survey showing that three-quarters of people view a hospitality business’ sustainability credentials as an important factor in deciding what to spend their money on.

Sinclair added: ‘This survey shows that UK companies appreciate the scale of the challenge.

“We all now need to work together to make better use of the affordable solutions readily available to overcome today’s challenges and put the UK back on track to reach net zero; from reducing energy waste to installing solar panels and EV chargers.

“This is good for profits and jobs, good for the planet, and it’s all possible with no upfront cost or taxpayer support.”

Some links in this article may be affiliate links. If you click on it, we can earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.