Firms facing tough choices after being hit hard by rising costs

Chief executive of 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 Ukrainian crisis.

The Wolverhampton-based business, which has pubs across the region, 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. It has decided to keep hourly rates above the National Minimum Wage.

Marston's had put a rise in drink prices through in March and had relaunched 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.

Richard Hughes, of Telford-based Chrisbeon office supplies, said: "We are seeing rising costs within our supply chain and longer lead-times than we were used to, but we are working hard not to pass those costs onto customers whenever possible.

"We are actually stocking more products in our warehouse to reduce lead-times and give people more choice to find a product at a price that suits them.

"We are also working with our national buying group that we are a long standing member of, to maximise the best deals and prices available to us as a group."

Anton Gunter, managing director of Global Freight Services in Telford, said: “Businesses in general are having to cope with lots of issues at the moment and within the freight industry we have experienced some of our biggest challenges to date with Brexit, Covid, driver shortages, congestion at the ports and now increasing fuel costs, but we are a robust industry, and we do what we can to keep goods moving for our customers.

“We have learned many lessons and our advice to businesses which are struggling to cope against the rising costs is to manage customer expectations.

“The ongoing difficulties are not going to go away any time soon. Businesses need to keep communicating with their customers and be realistic.

“Unfortunately, the increasing cost of raw materials combined with higher supply chain and logistical costs does mean that the cost of every day goods will grow and that is going to impact hard on consumers.

“If we can all do our bit to alleviate the overall burden on consumers where possible then it will help to soften the blow. There is a sense that if we strive together, we will thrive together and in business that sometimes means looking at our profitability, taking a bit less and sharing the burden.”

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.

"Retailers are doing all they can to reduce the impact on prices for shoppers which means reduced profit margins for everyone. We would like to see this year’s 100 per cent increase in business rates reversed and some way of helping businesses manage the rising costs of energy."