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Highlights:
- Energy bills have been rising in the past few months, causing troubles for the already struggling restaurants.
- While domestic consumers have an energy price cap, there's no such restriction in place for businesses.
For over two years, things haven't been particularly well for the hospitality industry. Hotels and restaurants had to pull down the shutters amid the COVID-19 restrictions. When they gradually reopened amid hopes for a better future, inflation broke the decades-old record, forcing people to spend cautiously on leisure items. Electricity and gas bills are reaching new highs now, with forecasts that they will rise further in the coming months.
Such high bills have prompted restaurants to exercise more caution in their energy usage, but things went a step ahead for a restaurant after it received a £10,000 gas bill, ten times more than what it usually pays.
Royal Crown, a Chinese takeaway in Aberdeen, is on the brink of closure because its owner cannot afford to pay such a hefty amount. This will also leave three full-time and two part-time staff unemployed, according to a BBC report. The energy supplier SSE (LON: SSE) is reportedly in talks with the restaurant owner and has offered a resolution.
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Notably, the restaurant is one of the thousands of businesses in the UK affected by the soaring bills. While domestic consumers are protected by an energy price cap that sets a maximum limit to the bills, there's no such cap for businesses.
In the wake of this news, let us take a look at some London-listed restaurant stocks and how they have been performing amid inflationary pressures.
Restaurant Group Plc (LON: RTN)
Restaurant Group boasts of about 400 restaurants and pubs across Britain and enjoys a market cap of £400.89 million. RTN’s share value has tanked over 56% over the past 52 weeks, while it has provided a return of -43.57% to investors on a year-to-date (YTD) basis. The EPS too stand in the negative territory at -0.05. As of 9:04 am GMT+1 on 16 August, the stock has a Relative Strength Indicator (RSI) of 64.93.
City Pub Group (The) (LON:CPC)
The UK-based firm owns and operates a chain of premium pubs across the southern half of England and Wales. CPC is listed on the FTSE AIM All-Share index and holds a market cap of £72.19 million. Over the past 12 months, the stock has declined by over 43%, and its EPS has also dropped to -0.07. It has an RSI of 59.61 as of 8:10 am GMT+1 on 16 August. The share price of the company stood at GBX 69.50 as of 9:18 am on Tuesday.
Fuller, Smith & Turner Plc (LON: FSTA)
Fuller, Smith & Turner owns pubs, hotels, and inns across the southern part of the country. FSTA’s shares traded at GBX 620.00, down 1.43% as of 9:45 am GMT+1 on 16 August 2022. At present, Fuller, Smith & Turner has a market cap of £224.59 million as of 9:04 am on Tuesday. The stock has slipped over 21% over the past 12 months, while its YTD return has fallen to nearly -10%.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
