Urgent intervention is needed to save hospitality businesses after new data has shown foodservice price inflation remains above 20%, alongside the continuation of high energy costs, UKHospitality has warned.
With sustained inflation levels, as per the CGA and Prestige Foodservice Price Index, and a drop off in support from the government on energy costs, the hospitality trade body is urging energy regulator Ofgem to force suppliers to engage automatic renegotiations for those businesses paying the highest costs.
Energy suppliers are also being asked to play their part and offer the option of spreading payments over a longer period time, to help cashflow, it said.
“It’s becoming ever more clear that this level of inflation is simply not going to budge for a significant period of time and, while there have been extremely marginal reductions, there appears to be no end in sight for businesses, Kate Nicholls, chief executive, UKHospitality said.
“The 20% level of inflation in food service we’re seeing confirmed once again today, alongside the £7.3 billion per annum in rising energy costs as a result of the reduction in government support, is unsustainable. We have already seen 150 pubs lost for good so far this year and that really will be the tip of the iceberg if nothing is done.
“Energy costs, food price inflation and staffing shortages are a triple whammy that are dragging businesses to failure. Something has to be done or hospitality will look like a shell of itself in a year’s time.”
Nicholls said the simplest action on offer was to get energy suppliers in line.
“It’s Ofgem’s job to do that and we need to see action urgently. Automatic renegotiation of the highest cost energy contracts, signed during the peak of the crisis, needs to be enforced and suppliers need to show flexibility in their payment rates,” she added.
“Those two actions would remove a huge weight from the shoulders of businesses and decrease the possibility of venues having to put up prices to survive, a move which ultimately fuels further inflation.”
