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Morning Briefing for pub, restaurant and food wervice operators

Tue 30th Aug 2022 - Update: Energy prices forcing pubs to the brink of closure; night-time economy at risk of collapse
Thousands of UK pubs ‘face closure’ without energy bills support: Thousands of pubs face closure without urgent government support to soften the blow from soaring energy bills, the beer industry has said, putting jobs at risk in a sector still battling to recover from the covid pandemic. The bosses of companies owning almost half of the UK’s 47,000 pubs said tenants were already giving notice because they could not cope with energy bills, which are due to rise more than fivefold in some cases. In a letter to the government and the Conservative leadership candidates, Liz Truss and Rishi Sunak, the British Beer and Pub Association (BBPA) said mass job losses were inevitable in the absence of help for an industry that employs 940,000 people. It warns that pub and brewing businesses across the UK are at risk of closure due to out-of-control energy bills, with upwards of 300% price hikes reported. Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery want extra help for an industry also facing big increases in wholesale food and drink prices. Nick Mackenzie, the chief executive of Greene King, said the energy bill blow had come just as the sector was battling back from the ravages of the covid-19 lockdowns, which hit hospitality particularly hard and left many with punishing debts. He said: “While the government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn. Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be wasted.” Chris Jowsey, the chief executive of Admiral Taverns, said the impact was frightening. He said: “One of our licensees reluctantly gave notice to leave his pub after the cost of electricity increased by 450%, making it impossible to trade profitably. Let’s not forget that for most licensees the pub is not just their business but also their family home.” William Lees Jones, managing director of the JW Lees pub group, said: “We have publicans who are experiencing 300% plus increases in energy costs and some energy companies are refusing to even quote for supply. In some instances, tenants are giving us notice since their businesses do not stack up with energy at these costs. These are not just pubs but people’s homes and the hearts of the communities that they sit in. The government needs to extend the energy cap to business as well as households.” Aside from bills, breweries, which use CO2 in the production of beer, warned they will be affected by the closure of one of the country’s largest CO2 producers, CF Fertilisers – which is halting production due to high energy costs. Emma McClarkin, chief executive of the BBPA, warned that the rise in energy bills would cause more damage to the industry than the pandemic did if it didn’t receive support in the next few weeks. She said: “There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers.”

Cluster of London dessert shop openings to feature in next edition of The New Openings Database, 14,300-word report included: A cluster of London dessert shop openings will feature in the next edition of The New Openings Database, which is produced in association with StarStock. The database will show the details of 315 newly announced site openings and upcoming launches for Premium subscribers when it is published on Friday (2 September), at midday. The database shows the details of which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location. There will also be a website link to the businesses so you can find out more about them. It is published on a monthly basis. The next edition features American-style dessert company Cookies & Cones, which has recently signed a deal to open sites in Primark stores, and has opened its first outlet under the agreement in Wood Green. Also added this month is Crème London, the dessert bar concept by chef Jeremy Coste, which was launched in Soho in September 2019, and has secured a site in Blenheim Crescent, for an opening later this year. In addition, Doughnut Time, founded by Thomas Anderson, which has opened its 15th site in the UK, in Oxford’s Westgate Shopping Centre, and is opening its next site in Windsor, will be featured. Meanwhile, Bubble waffle brand Bubblewrap, which was founded by Tony Fang, and has opened its fourth London site, in Westfield Stratford, is included. Premium subscribers will also receive a 14,300-word report on the new additions to the database. Premium subscribers also receive access to three other databases. The latest Propel Multi-Site Database,which is produced in association with Virgate, was sent to Premium subscribers last Friday (26 August). The database contained 47 new companies, bringing the total number of businesses listed up to 2,617. The 293 sites run by those 47 new additions means the entire database of sites has reached 66,609 sites. Premium subscribers also received a 3,200-word report on the new businesses added. The go-to database provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. There is also a synopsis of what the business does and significant news associated with it. Premium subscribers also receive the Turnover & Profits Blue Book, which is produced in association with Mapal Group, and the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Night-time economy at risk of collapse in the coming months: The UK’s night-time economy is at risk of collapse if the government cannot get a handle on current cost of inflation crisis the Night Time Industries Association (NTIA) has warned. Michael Kill, chief executive of the NTIA, said: “Billions of pounds of public funding spent during the pandemic could be wasted if the government cannot get a handle on current cost of inflation crisis, energy bills have increased over 300% for over 80% of businesses within the night time economy. The current climate would see this crisis take more businesses to the point of failure than the pandemic. As we move towards the colder months, where energy consumption increases, we will see costs spiral out of control. The next few weeks are critical, and will require swift action from the new prime minister taking over.”

High street firms forced to pay energy suppliers millions upfront: Energy suppliers are demanding millions of pounds upfront from major high street firms as hefty deposits for gas and electricity bills risk triggering a business cash crunch. The Telegraph reports a number of energy providers, including SSE and EDF, are asking some firms for huge deposits to cover months of bills amid fears that the crisis will cause swathes of small businesses to collapse. Businesses are not protected by the energy price cap and are typically on contracts that last a year or more. However, many firms are being refused quotes from suppliers and being told to cough up huge sums of money just as pressure on their finances rises. As energy prices soar, the size of the deposit demanded by suppliers – often a share of their annual costs – also rises rapidly. Kate Nicholls, head of UKHospitality, said: “This is common as there is little trade credit insurance available to hospitality businesses because of the covid challenges the sector faced and concerns about risk appetite. It means energy suppliers – and other suppliers – are asking for up front deposits to secure supply and these are usually based on a quarter or a six-month bill.” She said in some cases “millions of pounds for a high street chain or holiday park” was being demanded, delivering a major blow to companies’ finances.

Recession is on the way and will last until 2024, Goldman Sachs warns: Britain will plunge into recession before the end of this year and the economy will keep contracting throughout 2023, Goldman Sachs has warned. The Times reports the sharp downgrade on its previous predictions came alongside news that the number of high street stores closing continues to increase and that manufacturing insolvencies are soaring. In a research note, the investment bank said it believed that by the year’s end the economy will have shrunk for two consecutive quarters, the formal definition of a recession. Worse, the bank has flipped its previous estimates that the economy will grow by 1.1% next year and instead is forecasting that it will contract by 0.6% through the whole year. Economists at Goldman led by Sven Jari Stehn said that “concerns around cost of living pressures in the UK have continued to intensify on the back of the worsening energy crisis. Real consumption is still likely to decline significantly.” The Bank of England said this month that it expects that by this winter the UK will enter into a long recession that will last for five quarters and contract the economy by 2.1%. This is the result of a severe drop in household incomes as families battle rising inflation and pay more taxes. Meanwhile, the CBI said that in the three months to August the services sector had reported that cost pressures and average prices were rising at record rates, which in turn had led to a big fall in business confidence. Services industries overwhelmingly dominate the economy, accounting for 78% of total economic output and 82% of employment between January and March this year. CBI services sector businesses said that with costs soaring they expected employment levels to start to fall, that declining profits would continue to weaken and that investment would be reduced.

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