Fish and chip shops face rising costs as Iran conflict pushes up oil prices

Popular British fish and chip shops are facing renewed financial pressure as rising oil prices linked to tensions in the Middle East threaten to push up operating costs across the sector.

Industry experts are warning that the conflict involving Donald Trump, Iran and regional powers could have a direct impact on small food businesses across the UK, particularly energy-intensive foods such as traditional chippies.

The warning comes as global oil markets grow volatile amid fears the conflict could disrupt shipping lanes through the Strait of Hormuz, a key passage through which a fifth of the world’s oil and gas supplies pass.

Any sustained increase in crude oil prices tends to depress the economy, affecting transportation costs, electricity bills and supply chains, all of which are critical to the day-to-day operations of independent food retailers.

Molly Monks, bankruptcy specialist at Parker Walsh, said small hospitality businesses often feel the effects of global economic shocks faster than large corporate chains.

“Fish and chip shops generally operate in tight environments, so even a small increase in fuel, oil or electricity costs can start to bite quickly,” he said.

One of the biggest vulnerabilities of fish and chip shops is their heavy reliance on energy. Plants must operate continuously at high temperatures during all trading hours, using significant amounts of gas or electricity.

Commercial frying requires the oil to remain at high temperatures for long periods of time, making energy costs a large part of the daily costs of frying businesses.

“Commercial frying requires constant heat,” explains Monks. “That means businesses are exposed directly when electricity prices start to rise.”

This exposure makes fish and chip shops more sensitive to wider shifts in global energy markets. When oil prices stay high for a long time, energy suppliers tend to pass on higher wholesale costs to businesses in the form of higher tariffs.

In recent years, energy costs have become major challenges in the tourism sector following the increase in electricity prices caused by political tensions and disruptions in the supply of basic services.

Aside from energy costs, rising oil prices also affect the cost of transporting ingredients and goods, another major expense for pickup truck drivers.

Fish, potatoes, cooking oil, packaging materials and other important goods are transported across the country by road freight. As diesel and gasoline prices rise, suppliers often increase delivery charges to compensate.

“When fuel costs more, it costs more to move fish, potatoes and goods across the country,” Monks said.

For independent takeaway owners, the result is often a compound effect where several key costs go up at the same time.

“It’s not often that one debt increases,” he added. “Higher energy prices can increase the cost of refrigeration, packaging and supplier costs.”

Refrigeration systems used to store fresh fish and other ingredients are particularly energy-intensive, meaning rising electricity prices can quickly add to operational pressures.

Many fish and chip shops operate as small independent businesses rather than part of large chains. While that independence often gives them flexibility, it also means they often have less cash in reserve to absorb sudden cost increases.

Monks said large restaurant groups are generally better positioned for climate change.

“Big chains may have longer-term supplier contracts or more financial protection,” he said. “But small private businesses often have to respond quickly when costs start to rise.”

Unlike large hospitality operators, many independent takeaway owners buy ingredients and energy at market prices rather than under fixed long-term contracts. This means that price increases can come quickly.

The UK fish and chip industry has already faced several challenging years, including rising ingredient costs, labor shortages and high energy bills following the pandemic and global supply disruptions.

If energy and supply chain costs continue to rise, businesses may have little choice but to pass on some of those increases to customers.

That could mean higher menu prices, smaller portions or fewer promotions as businesses try to protect already thin margins.

“If costs continue to rise, businesses may have to raise prices or reduce certain components,” warns Monks.

However, raising prices has risks for small hospitality businesses, especially during a cost-of-living squeeze when consumers are already tightening their spending on shopping and eating out.

The challenge for many users will be to balance higher costs and maintain customer demand.

The situation highlights how quickly international events can affect everyday business on Britain’s high streets.

Energy price increases caused by the country’s conflicts could overwhelm supply chains within weeks, putting unexpected strain on small firms.

“International events can seep into day-to-day business very quickly,” Monks said. “For companies that are 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, analysts warn that oil and gas prices could remain high for months, potentially increasing pressure on tourist businesses across the UK.

For fish and chip shop owners, the worry is that another global energy shock could come just as the sector begins to recover from past crises.