reviewed-by
Reviewed by
Chris Andersen
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Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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12th April 2024

There are few more iconic British foods than a loaf of crusty bread. But as a sector fundamentally tied to energy markets due to the cost of heating ovens, bakeries are struggling to pay energy bills. In fact, many have seen 300% price increases in 2022, meaning the energy cost of running some small bakeries has gone from £1500-£4500 per month.

Iconic Bridport bakery Leakers closed this week after twenty years on the High Street. ‘Sadly, the current climate of escalating costs puts us in a position of uncertainty’ they said. ‘In tandem with rising costs of raw ingredients, our energy costs particularly are unsustainable.’

Struggling to Make a Crust

SME Share of Bakeries

London baker Sophia Handschuh started her Sourdough-focussed artisan bakery at the end of lockdown. After a hugely popular Kickstarter campaign, she opened on Christmas Eve last year, and now sells up to 300 loaves and 400 pastries each day. But this year’s energy price increases have forced her to take a £50,000 loan and raise prices twice for her loaves, baguettes and pretzels.

‘If I told you that our energy bill when we started the business a couple of years ago was about £1500 a month you’d probably have a heart attack right? Well, what if I told you that when the energy crisis began our energy bill overnight went up by 300%? Shocked yet?

“We couldn’t up our price to reflect this inflated bill anyway as we’d need to start charging maybe £20 a loaf to compensate which is why so many businesses in the UK just simply pay what they can and rack up a debt that we all hope this government will finally deal with. “

A Tide of Insolvencies

Despite the government’s recent announcement of a 6 month price cap on business energy, many fear a tide of bakery insolvencies may be inevitable. Bakeries are fundamentally dependent on wheat prices, as the core ingredient in most pies, pastries and breads. Since May 2021, wheat prices have gone up 165% due to the war in Ukraine. Those with fleets of delivery vehicles also face the cost of soaring fuel prices. Key ingredients like butter and oil have risen steeply, while the whole UK food sector faces massive staff vacancies due to Brexit.