Food and drink service businesses were more likely than any other industry to say they plan to 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.
The same percentage of food and drink service businesses said they had already done so in the last three months, which was among the highest of any group. They were also the most likely to reduce trading hours, even if they were still operating for the same number of days (21%).
The broader hospitality industry, which employs around 1 in 14 UK workers, has been particularly affected by rising energy prices, according to our Business Insights and Conditions Survey (BICS).
We use “hospitality” as an umbrella term for food and drink services – including pubs, restaurants and cafes – and accommodation, such as hotels. All of the figures include businesses that are either currently trading or that have paused trading, unless otherwise stated.
Food and drink service firms were the most likely to say energy prices were their main concern for November, while accommodation businesses were close behind.
The impact of energy prices was also reflected in the comments businesses made in the survey when asked to describe their current situation.
Across the hospitality industry, 23% of businesses said energy prices were their principal concern for October, which was similar to November (22%). The most recent responses were collected after the UK government pledged to subsidise businesses’ energy bills in September.
The hospitality sector as a whole was also the most likely to say that energy costs were making them consider raising their own prices in November.
Survey data also suggest that manufacturers are under significant strain from energy prices, which could have an impact on hospitality.
Food and drink service firms most likely to consider cutting multiple trading days
Percentage of businesses (currently or paused trading) saying they had taken, or planned to take, actions to reduce energy costs, by action and industry, UK, 17 to 30 October 2022
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Around 1 in 10 businesses across the hospitality industry said they had reduced or simplified goods and services (or planned to) in a bid to cut energy costs.
Hospitality was also the most likely industry to have taken or planned some sort of action to reduce energy spending.
Nearly 3 in 5 food and drink service businesses cited energy prices as their main concern for November
Percentage of businesses (currently or paused trading) saying their main business concern was energy prices, UK, 4 April to 30 October 2022
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Energy costs have been a significant worry for businesses across the UK in 2022, as market gas and electricity prices have increased.
The percentage saying energy prices were their main concern rose from 15% in late February to 21% in April, and has stayed around that level since then.
The percentage saying their main concern for October was energy prices was 23%. Most of these responses were collected before the UK government’s announcement of the Energy Bill Relief Scheme, which provides a discount on energy costs for businesses and other non-domestic energy consumers.
When businesses were asked about their main concern in November, after the government announcement, the percentage citing energy prices was similar, at 22%.
However, 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.
Among accommodation firms, 49% said energy prices were their main concern for November, well over double the figure for all industries combined.
Energy costs were pushing food and drink service firms to consider price rises in November
Around 2 in 5 food and drink service (41%) businesses said they expected their prices to increase in November, while the figure was 36% among accommodation businesses. That was compared with an overall average of 28%.
Of those, around three-quarters of food and drink service firms (76%) and 59% in accommodation said energy costs were making them consider price increases, compared with 38% across all industries.
However, the proportion of businesses saying energy costs were making them consider price rises in November was lower than in October. This came after the government announced its support package.
Businesses were less likely to say energy costs were making them plan price rises in November compared with a month earlier
Percentage of businesses (currently or paused trading) saying energy prices were making them consider price rises in October, compared with November, by industry, UK
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Manufacturers are also under pressure
More than half of manufacturing businesses (56%) said their production and/or supply had been affected by energy prices in early October, the second highest of any broad industry group after hospitality.
Of the 37% of manufacturing firms that said they expected their prices to rise in November, 51% said energy prices were a motivating factor for such increases, which was the highest after the hospitality industry.
Among drinks manufacturers specifically, 82% expected their prices to rise in November. That was the highest of any industry, although it was based on a small sample of businesses.
Of those, 93% cited energy prices as a reason for considering the increases.
Firms hit by energy price rises are more likely to be reporting other impacts
Across all industries, those businesses who said rising energy costs had affected production and/or supply were more likely to predict their prices would increase in November, and that turnover would drop.
They were also more likely to say they have had to access more financial support because of a general rise in prices, and to predict that their overall performance would fall in the coming year.
More than a third of businesses whose production was affected by recent energy price rises expected their turnover to drop in November
Percentage of businesses (currently or paused trading) saying they faced various impacts, by effect of energy price rises, UK, 3 to 16 October 2022
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Food and drink service businesses were the second-most likely to have seen production and/or supply affected by energy price rises in early October, at 71%, while 44% in accommodation saw their production and/or supply affected. The percentage for all businesses was 32%.
Businesses’ comments show they are feeling the impact of energy price rises, although many of them are likely to be facing a combination of challenges.
7 in 10 accommodation businesses expect turnover to drop
Percentage of businesses (currently trading) expecting turnover to decrease in November, UK, top 5 industries
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When asked about turnover expectations for November, 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%.
Many firms will be feeling the indirect effect of rising household energy bills on top of their own, as people are left with less disposable income. Our latest inflation figures show household energy costs were one of the main causes of increasing prices in the UK economy in the 12 months up to September.
Hospitality businesses are the most likely to think their performance will drop
Percentage of businesses (currently or paused trading) expecting overall business performance to decrease over the coming year, UK, 19 April to 10 October 2022
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Across all industries, around 1 in 6 businesses (17%) expected their overall performance to drop in the next year, when asked in early October. This was similar to early September but up from 12% in late April.
More than 2 in 5 food and drinks service businesses (45%) expected performance to drop, more than any other group. This was followed by the accommodation sector, at 30%. However, both were less likely to predict falling performance than a month earlier.
About the data
The quotes used in this article are taken from the free-text responses within BICS, in which businesses can describe their situation in their own words. They are all from businesses surveyed from 17 to 30 October and reflect some of the main findings of our analysis. Minor grammatical revisions have been made in some cases and all safeguard the anonymity of the respondents.
The industry breakdown used for this analysis is based on the UK Standard Industrial Classification (SIC).
The shortened industry names used throughout the article correspond to the following full SIC names:
|SIC code name||Short name|
|Accommodation and Food Service Activities||Hospitality|
|Food and beverage service activities||Food and drink services|
|Manufacture of beverages||Drinks manufacturers|
|Wholesale and retail trade and repair of motor vehicles and motorcycles||Wholesale and retail trade (motor vehicles)|