Fish and chip shops ‘under pressure’ as Iran war oil surge hits costs

Britain’s iconic fish and chip shops are facing renewed financial pressure as rising oil prices linked to escalating tensions in the Middle East threaten to drive up operating costs across the sector.

Industry experts warn 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 takeaways such as traditional chippies.

The warning comes as global oil markets have grown increasingly volatile amid fears that 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 supplies pass.

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

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

“Fish and chip shops typically operate on relatively tight margins, so even modest increases in fuel, oil or electricity costs can quickly start to bite,” she said.

One of the biggest vulnerabilities for fish and chip shops is their heavy reliance on energy. Fryers must operate continuously at high temperatures throughout trading hours, consuming significant amounts of gas or electricity.

Commercial frying requires oil to remain at consistently high temperatures for long periods, making energy costs a major part of daily overheads for takeaway businesses.

“Frying food commercially requires constant heat,” Monks explained. “That means businesses are directly exposed when energy prices begin to rise.”

This exposure makes fish and chip shops particularly sensitive to wider shifts in global energy markets. If oil prices remain elevated for an extended period, energy suppliers often pass higher wholesale costs through to businesses in the form of increased tariffs.

In recent years, energy costs have already been one of the biggest challenges for the hospitality sector following the spike in gas prices triggered by geopolitical tensions and supply disruptions.

Beyond energy costs, rising oil prices also affect the cost of transporting ingredients and supplies, another major expense for takeaway operators.

Fish, potatoes, cooking oil, packaging materials and other essential goods are transported across the country via road freight. As diesel and petrol prices climb, suppliers typically increase delivery charges to compensate.

“If fuel becomes more expensive, it costs more to move fish, potatoes and supplies across the country,” Monks said.

For independent takeaway owners, the result is often a compound effect where several key costs increase at once.

“It’s rarely just one bill increasing,” she added. “Higher energy prices can also push up refrigeration, packaging and supplier costs.”

Refrigeration systems used to store fresh fish and other ingredients are particularly energy intensive, meaning electricity price rises can quickly add to operational pressure.

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 typically have fewer financial reserves to absorb sudden cost increases.

Monks said that larger restaurant groups are generally better positioned to weather volatility.

“Bigger chains may have longer-term supplier contracts or more financial protection,” she said. “But small independent businesses often have to respond quickly when costs start rising.”

Unlike larger hospitality operators, many independent takeaway owners purchase ingredients and energy at market rates rather than under fixed long-term agreements. This means price increases can hit almost immediately.

The UK’s fish and chip industry has already faced several challenging years, including rising ingredient costs, labour shortages and higher energy bills following the pandemic and global supply chain disruptions.

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

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

“If costs continue to climb, businesses may have to increase menu prices or reduce portions,” Monks warned.

However, raising prices carries risks for small hospitality businesses, particularly during a cost-of-living squeeze when consumers are already tightening spending on takeaways and dining out.

The challenge for many operators will be balancing higher costs with maintaining customer demand.

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

Energy price spikes caused by geopolitical crises can ripple through supply chains within weeks, placing unexpected strain on small firms.

“International events can filter through to everyday businesses very quickly,” Monks said. “For firms already operating on narrow 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 stay elevated for months, potentially prolonging the pressure on hospitality businesses across the UK.

For fish and chip shop owners, the concern is that another global energy shock could arrive just as the sector was beginning to recover from previous crises.

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Fish and chip shops ‘under pressure’ as Iran war oil surge hits costs