Operators face new margin crisis from imminent changes to energy tariffs

Electricity metre

Operators have been warned that imminent energy price rises driven by changes in UK regulations is set to slash margins by as much as 0.5%.

Foodservice outlets are already under pressure from rates increases and higher operating costs, but the financial challenges could toughen further due to new environmental taxes and changes to the charging structure at peak times.

Delegates at the Hospitality Carbon Reduction Forum were told the new taxes and charges would increase energy prices by 20% by 2020, assuming the wholesale energy price remained constant. This would increase costs by £5,000 a year for an average pub or restaurant, according to industry news source Propel, which reported on the event this week.

Story continues below
Advertisement

The forum noted that without action, a typical hospitality operator spending 2.5% of turnover on energy costs would see margins reduce by 0.5%.

A number of mitigating actions were discussed, including analytics to minimise energy waste, battery storage, on-site generation, and buying renewable energy direct from source, Propel said.

Energy consumption has become a key focus for multi-site operators buying catering appliances and other equipment.

It was suggested at the forum that some operators are reinvesting up to 10% of their energy spend in energy-saving initiatives, which gives them up to 2.7% additional margin against the inefficient operators. Price changes would therefore leave inefficient operators at even more of a disadvantage.

Mark Chapman, of the Hospitality Carbon Reduction Forum, said: “The latest changes to energy charges will particularly affect hospitality operators, which have high-usage at peak hours. Without action, this will be a further cost increase eating into operator margins. There are many initiatives that can help operators improve efficiency and profitability, which could drive savings way above proposed price increases.”

Last week we revealed how Marston’s recently become one of only three companies in the UK – the others being Whitbread and Greene King – to secure a self-supply water licence that is expected to bring down its utility costs.

Authors

HAVE YOUR SAY...

*

Related posts

Top