Struggle for restaurants as cost of energy accounts for a third of your restaurant bill
New data suggests roughly a third of your restaurant meal bill goes towards the cost of the energy[1]
In response, restaurateurs are reducing portion sizes, turning down the thermostat and making menu changes to help manage costs [2]
One in five (20%) restaurants have had to raise meal prices to keep up with rising bills[3] and if costs continue to rise, 21% said they will not be able to pay bills on time[4]
Experts at Uswitch for Business advise restaurant owners to check the terms of their energy contract, to avoid overpaying by falling out of contract
Approximately a third (33%) of a diner’s restaurant bill goes towards paying the total cost of energy - according to new research from Uswitch for Business, the comparison service.[1]
The survey of decision makers at restaurants across the UK highlights a growing concern among UK restaurants as they struggle to keep pace with rising bills.
Almost one in three (30%) said that their restaurant is operating at a lower capacity than this time last year[5], with an average capacity of 60%.[6]
Unsurprisingly energy bills topped the long list of concerns (63%), followed by rent costs (30%), retaining customers (27%) and product inflation (26%).[9]
In response to rising energy bills, restaurants are being proactive in making changes, with some cutting down the menu (16%), reducing portion sizes and introducing dishes to the menu which require less energy to create (14%).[2]
Perhaps following the success of Veganuary, one in 10 (10%) say that they are moving the menu away from meat dishes to more cost effective ingredients.[2]
Despite efforts to reduce consumption, restaurants are still facing challenges to keep their energy costs under control. One in five (20%) restaurants have had to raise prices to keep up with rising bills.[7]
And if costs continue to rise, restaurateurs said they will risk not be able to pay bills on time (21%), potentially need to downsize (19%) or make staff redundant (18%).[4] Over seven in 10 (71%) said they expect costs to continue to rise this year.[8]
Worryingly, more than one in ten (11%) of those surveyed admit they don’t know what type of business energy contract they are on, which means they could be at risk of overpaying. Restaurants on a deemed rate could be spending anywhere from 30 to 50% more than negotiated rates.
The data also reveals almost one in three restaurants are training all staff in energy efficiency measures (31%) and are restricting the use of air conditioning and heating (31%).[2]
Unsurprisingly, three in 10 (30%) restaurants are only running a dishwasher when it’s full and almost one in four (22%) have resorted to closing the business during quieter times of the week.[2]
Jack Arthur, energy expert at Uswitch for Business comments: “The UK restaurant industry is facing significant challenges as a result of rising energy costs combined with rising inflation.
“Rates of restaurant insolvency have increased since COVID-19 and price rises from Brexit are pushing firms to a worrying edge.
“Restaurants who are struggling with their energy bills should be aware of their contract end date and review the terms of any new deal before signing. If they have concerns that they aren’t getting the right level of discount or support, they should speak with their supplier and shop around where possible.
“In the meantime, it is sensible to explore measures available to make their operations more energy efficient to mitigate against price rises and high costs as much as possible.”
Notes to editors:
Unless otherwise stated, all figures taken from omnibus research carried out by 72Point on behalf of Uswitch for Business. This was an online poll of 100 restaurant decision makers in the UK. The research was conducted between 2nd and 7th Feb, 2023.
1. Respondents were asked ‘What percentage of your business’s total expenditure is made up by energy bills’, the average response was 33%
2. Respondents were asked ‘What actions are the business that you work for taking to deal with rising energy costs, if anything?, 13% said ‘reducing portion sizes’, 31% said ‘turning off, down or restrict air-conditioning or heating’, 16% said ‘cutting down the size of the menu’, and 7% considered said they were ‘considering/introduced candle lit meals to save on electricity’, 10% said ‘moving the menu away from meat dishes’, 31% said ‘training all staff in energy efficiency measures’, 30% said ‘only running a dishwasher when it is full’, 22% said ‘closing the business during quieter times of the week’
3. Respondents were asked ‘Which, if any, of the following statements apply to you?’, 20% said ‘I have had to raise prices to keep up with bills, including energy bills’
4. Respondents were asked ‘If the costs/expenditure of the business you work at continues to rise, which, if any, of the following do you believe could happen to the business’, 21% said ‘it may not be able to pay bills on time’, 19% said ‘it might have to downsize’, 18% said ‘it may have to make staff redundant’
5. Respondents were asked ‘Is your business currently operating at the expected capacity compared to what was anticipated this time last year?’, 30% said ‘it is operating at a lower capacity than this time last year’
6. Respondents were asked ‘At what capacity (i.e., proportion of seats taken/ rate of production) the business you work at currently operating at?’, the average capacity was 60%
7. Respondents were asked ‘Which, if any, of the following statements apply to you’, 20% said ‘I have had to raise prices to keep up with bills, including energy bills’
8. Respondents were asked ‘Thinking about the coming year (i.e., 2023), do you expect the costs/expenditure of the business you work at to be higher or lower compared to the previous year (i.e., 2022), 27% said ‘much higher costs/expenditures’, and 44% said ‘somewhat higher costs/expenditures’
9. Respondents were asked ‘What are your biggest concerns for your business in 2023?’, 63% said ‘energy bills’, 30% said ‘rent costs’, 27% said ‘retaining customers’, 26% said ‘product inflation’
About Uswitch
Uswitch is one of the UK’s top comparison websites for home services switching, including energy, broadband and mobiles.
More people go to Uswitch to switch their energy, broadband and mobile than any other site, and we have saved consumers over £2.7 billion off their bills since we launched in September 2000.
Free mobile app Utrack also helps households manage their home energy usage and make potential savings.
Uswitch is part of RVU, a group of online brands with a mission to empower consumers to make more confident home services, insurance and financial decisions.