Updated: 4 days ago
Fish and chip shops are being warned that high gas and electricity prices may last well into 2023 and could even become the norm.
Wholesale energy prices have risen dramatically this year with gas increasing 400% since March and doubling since August, while electricity has also surged by 40%.
The sharp rises are expected to put pressure on fish and chip shops looking to renew their energy contracts, with annual bills predicted to increase by up to £10,000 for some operators.
Howard Weston, director at energy consultants Midland Business Solutions, comments: “A lot of businesses still aren’t fully aware yet of the increases coming their way because most will still be in a contract so it won't materialise for them until they start to look at prices and renewing, and all of a sudden they're going to realise some big increases.
“I have customers coming to me whose gas price is currently 3p/kWh who are now looking at almost 6p/kWh.
“Electric-wise, people might be coming out of a contract where they’ve been paying 14.5p/kWh and if they're looking to renew now they'll be looking around about 21-22p/kWh, so that's over 50% increase.
“If you think an average fish and chip shop might be using somewhere around £8,000 worth of gas and £4,000 of electricity, they could well be looking at an increase of well over £10,000 a year on their energy bills - that’s a scary number.”
Also impacting an already fragile situation is the fact there is no cap to limit the price companies can charge on commercial energy like there is with domestic energy. In addition, many suppliers are refusing to take on new customers from the hospitality industry.
Howard explains: “Since the pandemic, lots of the energy companies are refusing to offer hospitality businesses, which fish and chip shops are classed as, contracts because they don't want the exposure of giving them credit because they feel it's a bad risk.
“Once upon a time in my job as a consultant and broker, I could go to about 12 companies who would look at supplying energy whereas now there may only be one, two or three who are willing to take on new customers. Names like Opus Energy. Gazprom, EDF all refuse to take on new customers if they are in hospitality.”
Operators are being encouraged to shop around for the best renewal deal, but with prices high and very little choice of suppliers available, Howard says businesses are in a no-win situation.
“I wish there was a magic wand that I could wave and say this is what you should be doing but unfortunately for those now looking at renewing they really are caught between a rock and a hard place.
“They've either got to renew with an existing supplier on massively higher rates or go elsewhere where the rates are very high anyway. I do feel desperately sorry for them because there isn't anything they can do apart from limit the impact on how much they are going to take a hit for.
“And there isn't any predicted respite for a long time, well into 2023 at least. Prices will fluctuate here and there, they'll go up a little bit and go down a bit, but there won't be a massive sea change, and it's not going to drop huge amounts. There are no two ways about it, we are going to have to get used to higher energy prices for an awfully long time.”
One other option is for fish and chip shops to reduce their energy consumption, but with gas and electricity fundamental to their business, cutting back is difficult.
Howard adds: “Most shops will have to put their prices up. And sadly we will see some businesses go to the wall because of energy prices. It will be survival of the fittest and the ones in better shape will survive.
“Fish and chip shop owners are used to things going up by 5-10% here and there but when their energy bills will be going up by 80-90% for gas at least and the best part of 40% for electric, that’s huge chunks on an already big expense. We’re talking an extra £500-600 a month, I do genuinely feel for them.
"Fish and chip shops are hardworking, family businesses and they really are taking the brunt of this.”