Energy bills: hospitality operators cut wages and opening hours to cover costs

16 January 2023 by
Energy bills: hospitality operators cut wages and opening hours to cover costs

A hospitality operator has stopped paying herself a salary following the government's decision to cut energy bill support for businesses from April.

Maisie Collins, director of social enterprise bakery Hearth in London's Hackney Wick, said she will stop taking a wage for a few months, pick up shifts in other venues and offer her kitchen space to pop-ups to make ends meet.

Collins added: "We're having to re-evaluate our menu which will change in February, including some price rises. As of this week we've reduced our operating hours and staff shifts have moved about to try and trim some of the costs."

The government has confirmed it will cut its energy bill support package for businesses from £18b to £5.5b from April 2023 until March 2024.

Philip Inzani, founder of Polo 24 Hour Bar in London, which has been offering all-day dining since 1959, said the hike in energy bills across the sector from April would be "another blow to an industry already on its knees".

He added: "It's a kick in the teeth. Without help and energy costs rising threefold businesses will close. We are open 24 hours; our energy costs have increased by 150%. The industry needs representation immediately. Why do we not have a [dedicated] minister? It's ludicrous."

Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), told The Caterer that four in 10 small firms in the accommodation and food sector are considering closing, downsizing or radically changing their business model if wholesale energy prices rise again from April.

She said that the slashing of support "couldn't come at a worse time", adding: "Small firms are now caught between a rock and a hard place – as their energy bills rise, it'd be impossible for them to pass the full costs onto consumers, who are cutting back spending as cost of living surges."

McKenzie warned that many small hospitality firms will not be able to survive on the "pittance provided through the replacement scheme".

Some businesses, like the Coach and Horses in Kibworth, Leicester, have already closed their doors.

The pub announced on its website on 10 January: "We have tried everything to beat the rising energy costs, and without boring you with the figures, in the month of October, without notice, the energy costs more than doubled. It was just not sustainable."

Kie Humphreys, owner of the Coffee Cat café in Ipswich, raised concerns that the reduction in energy bill support would coincide with other cost increases.

He has already seen a 600% increase in energy bills compared to his pandemic tariff.

Humphreys said: "Businesses are getting bills coming from every direction. We've got the [National Minimum Wage] increase coming in in April. Our local supplier for eggs added on something like 20%. Coffee was up 12.7%."

Since the pandemic, Humphreys has reduced trading hours to cut costs, but is now considering moving into "more of a takeaway-style" business with in-house seating.

He added: "Certainly in Ipswich, so many hospitality businesses just shut their doors since the beginning of January, and the town centre is really dead now.

"I'm not saying government should support businesses massively because they can't keep dipping into public borrowings, [but] I think that means there's got to be a real big rethink."

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