The Daily Telegraph

Steak at £100 if restaurant chiefs passed on price rises

Energy crisis increases running costs for some businesses more than sixfold as profits wiped out

- By Hannah Boland

A STEAK would cost more than £100 if the price properly reflected soaring energy bills, a restaurant boss has warned.

Martin Williams, the chief executive of Rare Restaurant­s, which owns Argentine steakhouse chain Gaucho, said Liz Truss, the incoming Prime Minister, must act quickly to help businesses that are seeing their profits wiped out.

“At Rare Restaurant­s we fixed our energy prices – had we not, across our 22 restaurant­s the impact of rising costs would have resulted in a £3.5million hit on our profitabil­ity,” Mr Williams said. “To maintain margins this would mean steaks would have to triple in prices to beyond £100.”

At Gaucho, cuts of beef currently range from £19.50 for a small steak to £57 for a large one.

Mr Williams said: “Unless energy prices are addressed, restaurant­s across the sector will be unable to viably open and many SMES will sadly collapse.”

He called for Ms Truss to urgently reverse April’s increase in VAT and bring business rates for hospitalit­y businesses into line with shops.

The comments came hours after pub chiefs warned there would be a “ridiculous” increase in the price of a pint if premises passed on the rise in energy bills they were experienci­ng.

Tom Stainer, the chief executive of real ale campaign group Camra, said: “What you can say with surety is you can’t possibly pass on these energy increases and you can’t increase the pint by 500 per cent... How much would 500 per cent be on a £5 pint? You’re talking ridiculous amounts of money: 15 or 20 quid for a pint.”

Hospitalit­y businesses such as pubs and restaurant­s fear customers will be put off by large price increases but are increasing­ly battling higher costs across the board.

As well as rising utility bills, businesses are also grappling with an increase in their food and drink costs and rising salaries for workers, amid a labour crunch.

Estimates suggested that just one in three hospitalit­y companies were profitable this summer, coming at a time when operators are still lumbered with an average of £40,000 in loans and other pandemic debts per pub.

The continued rise in energy costs is expected to push even more pubs and restaurant­s into debt. Unlike households, there is no cap on energy price rises for businesses.

Some restaurant­s have seen their running costs increase by more than six times. Last week, the chef Tom Kerridge said the annual energy bill at one of his pubs had gone from £60,000 to £420,000.

The Michelin-starred chef told The Daily Telegraph that there was “no way that businesses are going to be able to absorb four, five, six hundred per cent price increases”.

Some businesses have already had to close their doors including fellow Michelin-starred gastro-pub The Fontmell, Shaftesbur­y, which said it was taking the decision after experienci­ng a £58,000 increase in bills.

Mr Williams, whose restaurant group also runs steak chain M Restaurant­s, said: “Spiralling energy costs are likely to mean closing time for many independen­t restaurate­urs, start-ups and founders. “Food and wage inflation, plus ridiculous rates have already wiped practicall­y all profitabil­ity out of our sector. Now energy costs will simply mean closure for many small and medium enterprise­s, unless the government steps in.”

Ms Truss has held discussion­s with industry executives in recent weeks on slashing business rates to help them cope with the steeper energy prices.

Kate Nicholls, Uk-hospitalit­y chief executive, called for the new government to act “quickly and decisively”.

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