Britain’s cafe owners are the latest to express the pressure their industry is feeling due to the cost-of-living crisis. In fact, Elliot House, co-owner of Southampton Retro Café say that their business would need to charge £7 for a coffee if they were to pass the rising energy costs onto customers.
“Energy prices have over doubled. It is now substantially higher than the rent we pay for the premises.
If a Latte followed the cost of everything else increasing, you’d charge £7. Of course, you’d go out of business because a 100% price hike cannot work in any situation.
It’s like the rug has been pulled from beneath our feet. We know we’re not alone. I wish I could maintain any optimism for the business. We’ll all just end up working for Starbucks and Amazon, won’t we?”
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Their situation is far from uncommon as Britain’s thriving cafe culture faces unparalleled challenges.
Cafes and small restaurants find themselves keenly affected by energy hikes, as they consume a relatively high amount of power via heating, cooking, refrigeration, lighting, and air conditioning.
A Five Times Increase in Energy Bills
Popular location The Magic Bean closed in Solihull this week, just eighteen months after opening. The cafe owner Katie Washbourne said their energy bills were now ‘ridiculous’ after rising from £280 to a massive £1200 per month.
“With the price hikes, it got to the point where we couldn’t keep passing on the price to the consumer. Our electricity bills were ridiculous, we were told we weren’t entitled to government help for them, because we were in a contract.”
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Steve Magnall, director, and co-owner of Two Magpies Bakery sounds the alarm:
“Costs are soaring in all areas – energy, ingredients, packaging, everything, and we’re quite nervous as these increased costs are obviously eating into our profits.
We’ve seen our energy bills rise from anywhere between 127% in one location to 400% in another.”
60% Increase in Restaurant Insolvencies
Data from accountancy group Hacker Young showed that 1,406 restaurants in the UK closed their doors in the 12 months to May, up 64% on the previous year, an even larger rise than the wider hospitality industry.
“The cafe sector, as a fundamental part of Britain’s high streets, finds itself facing an existential crisis” comments Alan Bradstock, chief Insolvency Practitioner for Company Debt.
“Staff shortages caused by Brexit followed by COVID-19 caused massive rates of business failure in a sector already weakened by the struggles of city centres, a slowdown in tourism, and a cultural shift to working at home. Where multiple pain points coincide for any sector, we’re going to see a notable spike in insolvency.
For the UK’s Cafe scene, energy hikes are going to hit hard, as is the fact that coffee is a luxury many consumers will forego in a period of austerity.”
