Energy price hikes: Restaurants feel the heat as costs soar

10-Feb-2014 - Last updated on 01-Aug-2024 at 11:56 GMT

Lightbulb moment: Sixty-eight per cent of restaurants are now adopting new measures to try and cut their energy usage

The inflation-busting price hikes announced by ‘the big six’ electricity and gas firms last year have hit hospitality businesses hard, with 90 per cent of restaurateurs claiming rising energy costs have forced them to reassess menu prices.

British Gas, Edf, Eon, Npower, Scottish Power and SSE all caused nationwide anger after ramping up their prices in November and, according to the Bookatable Dining Index, the financial damage for restaurants is already becoming clear (scroll down for infographic).

The Index, which is based on interviews with 200 UK restaurants and supported by industry data, discovered that soaring energy prices have had the biggest negative impact of any factor affecting profits in the hospitality industry, with 68 per cent of restaurants now adopting new measures to try and cut their energy usage.

“Our Dining Index shows the pressures felt by the restaurant industry,” said Bookatable’s chief executive Joe Steele. “Many restaurants operating today have worked hard to survive the economic decline, but now face similar challenges that consumers will recognise from their own households, as food and energy prices soar.

“This is a real concern for the restaurant industry as well as diners, as while profits and growth suffer, the cost of eating out is impacted.”

Grub's up

food-waste — Bookatable's data shows 70 per cent of restaurants now consider food wastage to be a 'huge concern' for their business

Bookatable’s report, released today, also found that food costs continue to cause concern among the restaurant industry. Last year’s Index revealed that food prices had overtaken rent and rates in the list of overheads facing UK restaurants, and the 2014 report reveals that the cost of food is now the biggest expenditure for one in five businesses.

Eight out of ten restaurants believe rising food costs have had the greatest impact on menu prices over the past six months. When asked what measures they have introduced to reduce costs in the last six months, over half (60 per cent) of restaurateurs said they have started to monitor food waste and almost a third (28 per cent) have reduced portion sizes to avoid binning uneaten meals.

Commenting on Bookatable’s findings, John Dyson, food adviser at the British Hospitality Association, said: “Higher energy bills and rising food costs have made it much tougher for restaurant owners to grow their business or remain profitable. During the recovery phase, restaurants will need to focus on the areas that can make a difference to their business – whether that’s hiring the right talent, being more marketing savvy or adopting new technology that delivers true ROI.”

Bookatable Dining Index: Key findings

Online bookings: While software and hardware remain the second lowest expenditure for restaurant owners, 88 per cent of restaurants are now reaping the benefits of online bookings, compared with 68 per cent six months ago.
#SocialRestaurant: Eating out has become more of a ‘social’ experience, with customers using mobiles to share their dining experience on social networking websites. In 2013, nearly half (48%) of restaurants said they were actively using Twitter and 73% using Facebook. In 2014, this has increased to 65% and 76% respectively.
Food spotting: Nearly all restaurant owners surveyed (88 per cent) have witnessed customers taking pictures of their food in their restaurant in the last six months.
Reviewing reviews: Whilst a large proportion of social media buzz around eating out is positive, the new wave of food critics who upload a photo of a nice meal or check in at a restaurant pose a risk to merchants. The majority of restaurateurs (86 per cent) believe that bad reviews have a negative impact on their business.

INFOGRAPHIC: How we eat out…