Fish and chips shops are afraid to survive due to rising energy prices

SKEGness, England – August 30, 2022: Salt fish and chips shop in Skegness, Lincolnshire. Manager Liam Parker told CNBC the family business is looking to cut costs over the winter as rising energy and fish prices put pressure on small businesses.

Elliot Smith/CNBC

SKIGNESS, England. Traditional British fish and chip shops are facing ‘disappearance’ as energy and fish prices skyrocket, an industry official and shopkeepers warn.

The UK is facing a historic cost-of-living crisis due to a sustained upward spiral in electricity bills that has driven double-digit inflation and is expected to worsen next year, hitting consumers and small businesses.

Meanwhile, the prices of fish, potatoes and butter have soared in light of Russia’s invasion of Ukraine and the international sanctions that followed. Russia is one of the largest seafood producers in the world, and is a key supplier of white fish to many countries.

“It’s starting to cripple us a little – [school summer] The holidays end next week and people will focus on energy prices themselves, so I think this winter is going to be tough,” David Wilkinson, owner of The Blue Fin restaurant in Skegness, Lincolnshire, told CNBC last week, adding that the business is in This year has already seen a 60 percent increase in electricity bills.

“Most people only talk about opening a few days a week because it’s so quiet here. I think a lot of people will go under if we don’t get help from the government.”

David and his partner Eileen Beckford have been running a restaurant for seven years in the center of an east coast seaside town that is a traditional summer getaway for many Britons.

SKEGness, England – August 30, 2022: David Wilkinson (right) and partner Eileen Beckford (left), owners of The Blue Fin in Skegness, Lincolnshire, are worried about the future as rising fish and energy prices hit traditional British fish and chips. the shops.

Elliot Smith/CNBC

“I used to have a restaurant open upstairs and downstairs, a lot of staff – that’s not possible now, we just have to put it on trays, charge the same price, save money on expenses, which helps bring the cost down a bit. . It’s a good margin now, that’s for sure,” he said. Blue Fin is also having difficulty finding staff as the country’s labor market remains extremely tight.

Before the pandemic, he was paying £70 ($81.16) for 3 stone (42 pounds) of fish, but this has now risen to £270, with most of his fish coming from Russia. The UK government has imposed an additional 35 per cent tariff on seafood imports from Russia as part of its punitive measures following the war in Ukraine, and Wilkinson’s suppliers have told him that this is likely to hit even harder in the winter.

Instead, many fish and chip shops are turning to Scandinavia, and representatives from the National Fish Fryers Federation (NFFF) recently visited Norway to try to alleviate the price surge.

A key question facing the industry is to what extent fish and chip shops can pass on price increases to consumers before they start to lose business, as fish and chips have long been seen as an affordable treat, especially in traditionally working-class areas of the country. . .

“We’re scared”

Liam Parker, who runs Salt’s Fish and Chip Shop on the opposite side of town, noticed that energy prices doubled when it opened during long business hours in the summer, and the business is looking to save as much energy as possible during the winter.

“In winter, Skegness turns from a very busy town into a ghost town. We will keep an eye on everything and not overdo it,” he told CNBC last week.

“Obviously the hours are shortening a bit, but we are trying to make as much money as possible in the summer to get through the winter.”

Parker estimates that the family business has been forced to raise the price of fish twice this year due to a rise in wholesale prices of around £20 a box. Suppliers cited higher travel requirements and rising fuel costs for harvesting fish as major drivers of price increases.

“We are hopeful at the moment, but don’t get me wrong, as owners we are scared. We have had conversations between the whole family that we read and we are not sure what will happen in the future. Hold on, Parker said.

He added that businesses are reaching out to suppliers to try to lock in prices for a year or more, but the uncertain macroeconomic and geopolitical outlook means many are reluctant to engage in such conversations.

“The Extinction Event”

Andrew Crook, president of the UK’s National Fish Fryer Federation and owner of Skippers of Euxton in Chorley, Lancashire, told CNBC on Monday that this is potentially the worst crisis the industry has ever faced.

The price of fish and chips at Skippers has risen by £1.60 since the start of the year, but Crook said the price he pays for fish has doubled. He suggested that the outlook is “very scary indeed” as the impact of the 35 percent duty on Russian imports has not yet been fully reflected in the prices charged by suppliers.

Meanwhile, a drought in the UK has hampered crop production, which Crook expects will drive the price of potatoes further higher, and the price of sunflower oil, used in many fish and chip shops, has doubled, although it has begun to level off as supply increases. shortage is alleviated.

“It’s a very bleak picture, but we’re resilient, we have a great product and I’m sure the industry will get through this. will be,” Crook said.

“I don’t think it’s only the fish and chips shops that have been affected, although we do have some unique issues because of the conflict, our dependence on some products that come from Russia and Ukraine, so we are probably taking the brunt. it, but I think it’s really an extinction event for small businesses without government intervention.”

SKEGness, England – August 30, 2022: High Street in Skegness, Lincolnshire colloquially known as Chip Pan Alley.

Elliot Smith/CNBC

The NFFF is lobbying the British government to reform its small business tax system, with VAT (Value Added Tax) – a levy on goods and services at every stage of the supply chain – back to 20% from April after a relief package during the Covid-19 pandemic.

“We’ve always had a pretty small margin because the fish is expensive and we’ve always had a pretty low selling price, but we’re working on volume. We’ve always felt the pain of VAT – now I think the rest of hospitality is all saying the same thing,” Crook said.

“Right now. We need a courageous government that makes these difficult decisions and recognizes it as an investment in the future because we are truly providing great jobs.”

He explained that commercial energy users do not have the same freedom as households to switch to a new supplier during the term of the contract. The NFFF is also calling for an overhaul of the energy system to offer more rewards for businesses that invest in people and environmentally friendly practices.

“Small business is the largest employer in the country. We’ve always been known as a nation of shopkeepers – to be honest, I don’t know who we are now,” Crook said.

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