Fish and chip shops fear for their survival as energy and prices rise

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SKEGNESS, ENGLAND – Aug 30, 2022: Salt’s fish and chip shop in Skegness, Lincolnshire. Manager Liam Parker told CNBC the family business is looking to cut costs over the winter as soaring energy and fish prices weigh on small businesses.

Elliot Smith/CNBC

SKEGNESS, England – Traditional UK fish and chip shops are facing an ‘extinction event’ as energy and fish prices soar, the official industry body and owners have warned of shops.

The UK is facing a historic cost of living crisis due to a persistent upward spiral in energy bills, which has caused inflation to double and is set to worsen next year, hitting consumers and small businesses.

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

“It’s starting to paralyze us a bit – the [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,” said David Wilkinson, owner of The Blue Fin restaurant in Skegness, Lincolnshire, to CNBC last week, adding that the company has already seen a 60% increase in its energy bills this year.

“Most people only talk about a few days a week being open, because it’s so quiet here. I think a lot of people are going to collapse unless we get help from the government.”

David and his partner Eileen Beckford have run the restaurant in the center of the east coast seaside town, a traditional summer holiday destination for many Britons, for seven years.

SKEGNESS, England – Aug 30, 2022: David Wilkinson (R) and his partner Eileen Beckford (L), owners of the Blue Fin in Skegness, Lincolnshire, worry about the future as rising fish and seafood prices energy hammers the traditional British fish and chips shops.

Elliot Smith/CNBC

“I used to have the restaurant open upstairs and downstairs, lots of staff – can’t do that now, we just have to put it on trays, charge the same price, save money on cost, which helps bring the cost down a bit. It’s a nice margin now, that’s for sure,” he said. The Blue Fin is also struggling to find staff as the country’s labor market remains extremely tight.

Before the pandemic, he was paying £70 ($81.16) for 3 stones (42 pounds) of fish, but that has now risen to £270, with much of his fish coming from Russia. The British government introduced an additional 35% duty on seafood imports from Russia as part of its punitive measures after the war in Ukraine, and Wilkinson’s suppliers informed him that this may hit even harder during the winter.

Many fish and chip shops are looking to Scandinavia instead, and representatives of the National Federation of Fish Fryers (NFFF) recently visited Norway to try to alleviate the problem of soaring prices.

A key issue facing the industry is the extent to which fish and chip shops can pass on cost increases to consumers before they start losing business, fish and chips having long been seen as a affordable treat, especially in traditionally working-class areas of the country. .

“We are scared”

Liam Parker, manager of Salt’s Fish and Chip Shop across town, saw energy prices double as it opened for long hours over the summer, and the business is looking to conserve energy as much as possible throughout the winter.

“In winter, Skegness goes from very busy to a bit of a ghost town. We’ll keep an eye on everything and not overdo it,” he told CNBC last week.

“Obviously the hours are getting a bit shorter, but we’re looking to make as much money as possible in the summer just to get through the winter.”

The family business has been forced to raise its fish prices twice this year due to rising wholesale prices of around £20 per box, Parker estimated. Suppliers cited increased travel and rising fuel costs to collect fish as the main drivers of price increases.

“We’re hoping for the minute, but don’t get me wrong, as owners we’re scared. We’ve had conversations between the whole family, what we’re reading, and we don’t know what the future holds. hold,” Parker said.

The company has contacted suppliers to try to lock in prices for a year or more, but the uncertainty of the macroeconomic and geopolitical outlook means many are unwilling to engage in such conversations, he added.

“Extinction Event”

Andrew Crook, president of Britain’s National Fish Fryers Federation and owner of Skippers of Euxton restaurant 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 paid for fish had now doubled. He suggested the outlook is “very scary” as the impact of the 35% tariff on Russian imports is not yet fully reflected in prices charged by suppliers.

Meanwhile, a drought in the UK has hampered crop growth, which Crook says will further drive up potato prices, and the price of sunflower oil, used by many fish shops -fries, has doubled, although it has started to level off as supply shortages ease.

“It’s a very bleak picture, but we’re resilient, we’ve got a great product and I’m sure the industry will pull through. It could knock a lot of people down along the way – I’m pretty sure it will,” Crook said.

“I don’t think it’s just fish and chips that’s affected, although we’re under unique pressures because of the conflict, our reliance on certain products from Russia and Ukraine, so we’re probably under the biggest of but I think it’s really an extinction event for small businesses without the government stepping in.”

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

Elliot Smith/CNBC

The NFFF has lobbied the UK government to reform its tax system for small businesses, with VAT (value added tax) – a levy on goods and services at each stage of the supply chain – returning at 20% from April after a relief package during the Covid-19 pandemic.

“We’ve always had a pretty tight margin because 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 – I think now the rest of hospitality are all saying the same thing,” Crook said.

“Now is the time. We need a courageous government that will take these tough decisions and recognize them as an investment in the future because we are providing great jobs.”

Commercial energy customers do not enjoy the same freedoms as households to switch suppliers during the term of the contract, he explained. The NFFF is also calling for an overhaul of the energy supply system to provide greater reward to companies that invest in people and environmentally friendly operating practices.

“Small businesses are the biggest employer in the country. We’ve always been known as a nation of traders – I don’t know what we are now, to be honest,” Crook said.

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