It is forecast that 50% of UK’s Fish & Chip Shops could close over next 5 years. Will the market divide in ways not seen since the 1970s?

It is a striking forecast and the logic is simple - The price of oil used in deep fat fryers is surging because Ukraine and Russia account for more than 50 percent of the world’s production of sunflower seeds. With sunflower oil supply set to be squeezed dramatically this year, the price of alternative forms of cooking oil is also rising rapidly. Add in food inflation and most will struggle to provide low-cost great meals as has long been the case.

Last week the Government announced a 35% tariff on Russian fish imports. Between 30 - 40% of fish sold in chip shops comes from Russia.

It is a very sad prospect but many other hospitality operations could face similar pressures. It has been forecast that the Ukraine war could see food inflation hit close to the 18% mark so prices are set to increase at a time when the consumer is also struggling with rising energy costs and increased taxation. The view is that the consumer will naturally spend less in hospitality.

This trend reflects another view which has been a growing discussion on just how the hotel industry could find itself divided as the sector splits into almost 5 divisions:

· The luxury market

· The bespoke boutique experience

· The business and budget hotel

· Lodges

· Air BnB.

There is a growing view that many of the traditionally successful branded business hotels will be challenged and will need to either downgrade into budget territory or change their models. With the lack of international business travel until at least 2024, there is not enough business to sustain the market as there once was.

Interestingly the belief is that luxury and boutique markets will prosper as those with spending ability seek new and stronger experiences. Lodges too are expected to continue on a development curve as many want to feel closer to the great outdoors, especially with families.

Whether one agrees with the above of not, the next 18 months are likely to challenge the industry in ways which have not been foreseen. There is no doubt that the industry will adapt and come through but how will it have changed?

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Costs are rising. Pressures are increasing. It will lead to one of the greatest periods of change.

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“Many have been in denial and only now are understanding that things have changed and that cost pressures may well sink a number”.