West Midlands firms face tough choice on raising prices
Businesses across the West Midlands are facing tough choice on raising prices as they are hit by rises in costs of energy, raw materials, transport and wages at the same time.
Chief executive of Wolverhampton-based Marston's Andrew Andrea said the pubs and restaurants business was coping with a lot of volatility in its costs base since the start of the Ukranian crisis
It faced a £5 million rise in its electricity costs for the second half of its financial year after its price hedge ended in March.
"Fortunately we are hedged on gas to April 2023," he added.
It faces a seven per cent rise in food costs – after working with longstanding suppliers to make sure it was operating in a fair way – and a 7.5 to eight per cent rise in labour costs where it also faces the challenge of attracting and keeping workers and has decided to keep hourly rates above the National Minimum Wage.
Marston's had put a rise in some drink prices through in March and had re-launched its food menus focused on offering value for money.
Mr Andrea said more prices rises were not in current plans but the group would be monitoring the situation.
The price of wine in its pubs increased eight per cent earlier this month while food prices increased by eight per cent alongside the reintroduction of the 20 per cent rate of VAT.
Marston's also confirmed that its brewing joint venture Carlsberg Marston's Brewing Company is no longer expected to make a profit after being hit hard by rising commodity and electricity costs.
The British Independent Retailers Association has called for a reduction in business rates to support those struggling to deal with extra costs.
Chief executive Andrew Goodacre said:"Inflation at these levels, the highest for 40 years, is a new challenge for many independent retailers.
"Whilst there is understandable focus on the cost of living, we would urge the Government not to forget about targeted support for businesses also struggling to deal with the extra costs due to inflationary pressures."
Late payments have increased for 26 per cent of small and medium-sized businesses since the cost of living has gone up, according to new research from Barclays.
The findings indicate that rising prices have started to impact payments between businesses, as 16 per cent of SMEs say that they are finding it more difficult to pay suppliers themselves because of the cost of living crisis, rising to 33 per cent in the manufacturing and construction sectors.
Late payments are the single biggest cause of business failure.
