Why are restaurants going bust in 2019?

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This week we’ve heard the news that Jamie’s Italian has gone into administration, adding to the number of UK restaurants going bust over the last 18 months.

As a result of this, we thought we’d take a quick look at where the additional pressure is coming from for UK restaurants chains.

Rising Energy Costs

Let’s start with what we know best. The wholesale cost of energy has been steadily increasing over the last few years alongside a raise in government led taxes and levies. Without properly managing your energy purchasing strategy and taking a close look at your efficiency levels, this cost can be crippling for some businesses.

Increased Business Rates

For Jamie’s Italian in particular, this has been cited as one of the main reasons for the company’s collapse. However, it is something that all high street retailers are seeing across the board – an increase in business rates and landlord costs causing disruption to the way they run the business. This, combined with the recent increase in minimum wage and living wage, has caused significant increases to overheads for these chains.

Brexit

We’re in a blame everything on Brexit type of climate at the moment, but nobody can deny the impact that it has had on the value of the Pound against the Euro. Even small decreases in the strength of the Pound can make the cost of essentials that need to be purchased from Europe prohibitive to profits.

Consumer Spending Squeeze

It’s been talked about in the news over and over again, but due to uncertainty around Brexit and longer-term financial impacts on the average UK households a lot of people are less inclined to go out and spend their money in restaurants. We’ve seen this have a significant effect on the “mid-market” restaurants with Byron Burger, Strada, Prezzo and Carluccio’s all being impacted last year.

Let’s take a closer look at issues from a utilities’ perspective.

Energy and utilities are what we know best and having been working with restaurants and high street chains for over a decade, we know a thing or two about the struggles that these companies face. Some of the ones that are the most damaging from a financial and reputational basis are:

  • Fake Tech – we’re constantly seeing new technology hit the market that is designed to improve the environment and reduce your costs. But unfortunately, there’s also a lot of fake products that can cost thousands and provide zero results.

  • Hit and run brokers – amber energy was set up to combat this type of business. Brokers who are just in it to get a quick win with no commitment and no consideration for the client’s long-term future and success.

  • Budget certainty – without a strong energy strategy it is extremely difficult to future proof your business and set accurate budgets.

  • Reduce carbon emissions – lots of companies are being pressured to be ‘greener’, but the strategy they implement isn’t right for their long-term plan or to deliver tangible changed that can be published, leading to a return on investment that can support growth.

What is amber doing to support their clients in this sector?

Perhaps most importantly, we work in partnership with our clients in order to actively help them achieve greater success while keeping their business as lean as possible. We look to remove the day-to-day hassle of utilities, while ensuring the basics are done right and putting a solid strategy in place with controls, benchmarking and targeting to quickly address any overuse.

Our award-winning procurement team help our clients to get the best wholesale energy prices while delivering robust monthly management and reporting. And that’s the key – we’re here for the length of your contract, keeping everything running smooth and addressing any issues that approach.

Since 2011, we’ve been working with some of the fastest growing multi-site retailers and hospitality providers and continue to buck the trend and help them grow in the face of these challenges, completing over 500 meter installs with a 100% success rate.

 

About the Author

Jay Mooney is one of our senior relationship managers, focusing on high street stores, retail and hospitality. With a wealth of experience in the sector and several more years working within the energy industry, Jay is well placed to help you understand your business’ energy requirements.

 
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