Britain’s iconic fish and chip shops are under renewed financial pressure as rising oil prices linked to escalating tensions in the Middle East could drive up operating costs across the industry.
Industry experts warn that the conflict between Donald Trump, Iran and regional powers could have a direct impact on small food businesses across the UK, particularly energy-intensive takeaways such as traditional chippies.
The warning comes as global oil markets become increasingly volatile amid fears the conflict could disrupt shipping routes through the Strait of Hormuz, a key corridor through which around a fifth of the world’s oil and gas shipments flow.
Any sustained increase in crude oil prices tends to impact the economy, impacting transportation costs, energy bills and supply chains, all of which are critical to the daily operations of independent grocery retailers.
Molly Monks, an insolvency specialist at Parker Walsh, said small hotel companies often feel the impact of global economic shocks more quickly than larger corporate chains.
“Fish and chip shops tend to operate on relatively low margins, so even small increases in fuel, oil or electricity costs can quickly have an impact,” she said.
One of the biggest weaknesses for fish and chip shops is their heavy reliance on energy. Deep fryers must operate continuously at high temperatures throughout trading hours, consuming significant amounts of gas or electricity.
Commercial deep frying requires the oil to be at consistently high temperatures over a long period of time, making energy costs a large part of the daily overhead costs for takeaway businesses.
“Commercial frying of food requires constant heat,” Monks explained. “This means businesses are directly at risk if energy prices start to rise.”
This vulnerability makes fish and chip shops particularly vulnerable to wider changes in global energy markets. If oil prices remain elevated over a longer period of time, energy suppliers often pass on the higher wholesale costs to companies in the form of increased tariffs.
Energy costs have already been one of the biggest challenges facing the hospitality industry in recent years, after gas prices rose due to geopolitical tensions and supply disruptions.
In addition to energy costs, rising oil prices are also impacting the cost of transporting ingredients and supplies, another major cost for takeout operators.
Fish, potatoes, cooking oil, packaging materials and other essential goods are transported across the country by road freight. When diesel and gasoline prices rise, suppliers usually increase delivery fees to compensate.
“As fuel becomes more expensive, it costs more to transport fish, potatoes and supplies across the country,” Monks said.
For independent takeaway owners, there is often a compound effect where several key costs increase at the same time.
“It’s rare to see just one bill increase,” she added. “Higher energy prices can also drive up refrigeration, packaging and supplier costs.”
Cooling systems for storing fresh fish and other ingredients are particularly energy-intensive, so rising electricity prices can quickly lead to increased operating pressure.
Many fish and chip shops are small independent businesses rather than part of large chains. While this independence often gives them flexibility, it also means they typically have fewer financial reserves to absorb sudden cost increases.
Monks said larger restaurant groups are generally better able to weather the volatility.
“Larger chains may have longer-term supplier contracts or more financial protection,” she said. “But small independent businesses often need to respond quickly when costs rise.”
Unlike larger catering establishments, many independent takeaways purchase ingredients and energy at market prices rather than under fixed long-term contracts. This means that price increases can occur almost immediately.
The UK fish and chip industry has already endured several challenging years, including rising ingredient costs, labor shortages and higher energy bills as a result of the pandemic and disruption to the global supply chain.
If energy and supply chain costs continue to rise, companies may have no choice but to pass some of these increases on to customers.
That could mean higher menu prices, smaller portions or fewer promotions as companies try to protect already slim margins.
“If costs continue to rise, businesses may need to increase menu prices or reduce portions,” Monks warned.
However, price increases pose risks for small restaurants, especially at a time of tight living costs when consumers are already limiting their spending on takeaways and dining out.
The challenge for many operators is balancing higher costs with maintaining customer demand.
The situation highlights how quickly international events can impact everyday business on Britain’s high streets.
Energy price spikes caused by geopolitical crises can impact supply chains within weeks, putting unexpected strain on small businesses.
“International events can impact everyday businesses very quickly,” Monks said. “For companies already operating on thin margins, even small cost increases can make a big difference.”
If tensions in the Middle East continue to escalate or shipping routes remain disrupted, oil and gas prices could remain high for months, analysts warn, potentially prolonging pressure on hotel businesses across the UK.
Fish and chip shop owners fear another global energy shock could strike, just as the sector was just beginning to recover from previous crises.
