The Office for National Statistics (ONS) has reported that energy costs have been a significant worry for businesses across the UK in 2022 as market gas and electricity prices have increased, but obviously, some businesses are impacted more than others. There is plenty of food for thought for local businesses to chew over, as those businesses most concerned by and at risk from the surge in energy prices are in food and hospitality, both massive industries in this area.
The main points of their analysis released today are:
- CONCERNS – More than a fifth of businesses which have not permanently stopped trading (22%) said energy prices were their main concern for November 2022. The food and drink service sector had the highest percentage of businesses (58%) saying energy prices were the main concern for November, up from 39% reported for October.
It will therefore be of little surprise to see price rises in these industries, but at what point do customers decide prices are too high?.
- TRADING – Food and drink service businesses were more likely than any other industry to say they will cut trading by at least two days per week in November 2022 to reduce energy costs. More than 1 in 20 businesses in the sector (6%) planned to stop trading for two or more additional days a week in the month. They were also by far the most likely to reduce trading hours, even if still operating for the same number of days (21%).
This is probably a bigger problem in places liked Bude, where trade is seasonal anyway and trading days (or sometimes longer) are regularly dropped during low season.
- PRICES – Around 2 in 5 food and drink service businesses (41%) said they expected their prices to increase in November 2022, while the figure was 36% among accommodation businesses. That was compared with an overall average of 28%. Of those, around three-quarters (76%) of food and drink service firms and 59% in accommodation said energy costs were making them consider the increases, compared with 34% across all industries.
This is a difficult one, as people everywhere will be struggling with increased energy and food costs, inflation, and quite likely higher taxation, so as businesses feel a need to increase prices, consumers feel a need to cut back/down.
- TURNOVER – When asked about turnover expectations for November 2022, 70% of accommodation businesses (currently trading) predicted lower turnover. That was the second-highest response of any business group and more than triple the average of 21%. For food and drink service businesses, it was more than double the figure across all industries, at 46%.
Potentially a big problem for accommodation providers of all types.
- PERFORMANCE – Across all industries, around 1 in 6 businesses (17%) expected their overall performance to drop in the next year, when asked in early October. More than 2 in 5 food and drinks service (45%) businesses expected performance to drop, more than any other group. That was followed by the accommodation sector, at 30%. However, both were less likely to predict falling performance than a month earlier.
Do you have a food outlet or are you an accommodation provider (or other business?). Let us know your concerns.