Tripled Energy Costs Puts 2500 Small Bakeries at Risk of Insolvency

Finance Experts CompanyDebt warns about the incoming wave of insolvency faced by the UK bakeries.

As a sector fundamentally dependent on energy usage, current crises have left thousands of UK bakeries on the brink of collapse.

From ingredients prices to electricity rates, virtually every bakery’s expenses have dramatically increased this year. As a result, most of the 2 500 independent UK bakeries might have to go into debt to survive the winter without putting their prices through the roof.

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.