Hospitality food costs rise as inflation hits prices
Updated: Jul 21, 2022
As any restaurateur knows, food prices can be a major source of stress. After all, rising ingredient costs can eat into profits and make it difficult to keep menu prices affordable for customers. We take a look at some new research that highlights just how stark the issue currently is for hospitality businesses and what Beacon can do to help to stabilise the situation.
Food prices have increased significantly over the past year, with some items seeing price hikes of up to 40% according to new research by Fourth. Dairy products, grains, meat, fish and fruit and vegetables have all become between 20-40% more expensive, while overall costs have risen by 10%. A number of factors have contributed to this supply chain crisis, including the surge in energy and raw ingredient prices, the ongoing war in Ukraine, labour shortages and wage increases and UK inflation being at its highest since the 1980s.
In an attempt to offset these rising costs, operators are turning to technology, streamlining their supplier base and changing their menu offerings. However, many businesses are still being forced to increase prices, at a time when the cost-of-living crisis is beginning to bite.
Today's published results from The Consumer Prices Index show that owner occupiers' housing costs (CPIH) rose by 8.2% in the 12 months to June 2022, up from 7.9% in May. The largest upward contributions to the annual CPIH inflation rate in June 2022 came from housing and household services (primarily electricity and gas) and transport (principally from motor fuels).
As inflation rises and budgets tighten, people naturally spend less on leisure activities, as their purchasing power decreases. However, this squeezing of household budgets means staying profitable whilst remaining competitive is a precarious balancing act.
Paul Brown, Beacon Managing Director, comments 'Such a noticeable increase in overheads is a devastating blow for a sector already bruised from the volatility of the past few years. In fact, these rises in overheads could put a dent in the post-pandemic recovery of many small businesses.'
'That's why Beacon are completely committed to supporting our customers throughout this period of instability. Our team are in constant contact with our supply partners, working collaboratively with them to look for solutions that will help our customers mitigate these price moves. From investigating product swaps and menu re-engineering to optimising purchasing and delivery schedules, our team will support you in ensuring your supply chain is offering the very best value for your business.'
‘We also offer a complimentary procurement audit, which looks at key lines of your P&L to see whether any efficiencies can be made and ensure you’re making the most of the added value services that your suppliers can offer.’
If you're concerned about inflationary pressures, speak to your Beacon Procurement Services Manager. They will be able to advise you on the best course of action and provide support throughout the process. With their help, you can ensure that you're getting the best value for your money and avoiding any unnecessary costs. If you're unsure who your Procurement Services Manager is, simply drop us a line via Live Chat or complete the short contact form and we'll put you in touch with them.