Pubco’s Warn of Mass Closures as Energy Bills Surge 300%

Pub and brewing company owners have sent out a stark warning of mass closures within months due to rapidly increasing energy bills.

Bosses of six of the UK’s biggest pub and brewing companies have signed an open letter to the Government urging it to act in order to avoid “real and serious irreversible” damage to the sector.

These included Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery.

Knock-on effects from the Russian invasion of Ukraine for spiralling gas prices have seen energy bills massively rise for operators.

On Friday, regulator Ofgem confirmed that bills for an average UK household would surge by 80% in October when the new price cap comes into force.

However, businesses operate without a regulated price cap, with some pub owners warning that their bills have quadrupled or are struggling to even find suppliers willing to power their venues when contracts come up for renewal.

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.
“Government needs to extend the energy cap to business as well as households.”

Nick Mackenzie, chief executive officer of 2700-strong group Greene King, said one tenant has seen their energy bill jump £33,000 for the year.

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.”

The bosses, who sit on the board of British Beer and Pub Association (BBPA) have demanded the Government implement an urgent support package that effectively caps the price of energy for businesses.

On Friday (August 26) Colin Wilkinson, Scottish Licensed Trade Association managing director, said:
“What is happening domestically affects businesses as people will reduce their outgoings to pay soaring energy bills and hospitality is very much in the firing line.

“We’re already hearing of pubs and restaurants now considering closing over the winter period because they are unable to absorb recent sharp increases in energy bills. Already, there are reports of energy prices increasing by 300% and, in one case, just under 500% and energy providers requiring ‘bonds’ from hospitality owners looking for an alternative supplier.

“Businesses need help and they need it now. There must be an energy cap for businesses, particularly for SMEs, perhaps based on the number of employees. It has also been suggested that the Government should introduce an energy furlough scheme to help businesses through this difficult time – in some ways, the energy crisis is having a more damaging impact on businesses than the pandemic.”

Mr Wilkinson added that the recent interest rate hike, coupled with the energy crisis, could be too much for some SMEs to bear. “Just when the hospitality sector is starting to recover from the pandemic, businesses have yet more costs to absorb. Most are still paying off debts incurred during Covid.

Emma McClarkin, chief executive of the BBPA, said:
“This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks, consumers will now be thinking even more carefully about where they spend their money.

“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.”

A Government spokesperson said:
“No government can control the global factors pushing up the price of energy and other business costs, but we will continue to support the hospitality sector in navigating the months ahead.

“That includes providing a 50% business rates relief for businesses across the UK, freezing alcohol duty rates on beer, cider, wine and spirits and reducing employer national insurance.

“This is in addition to the billions in grants and loans offered throughout the pandemic.”