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Pubs’ food costs spiral upward

By Gurjit Degun , 02-Sep-2011

Related topics: General News

Food-led pubs are having to explore different menu options and cooking techniques in a bid to keep costs down as food inflation reaches 20% on some items.

Cost of food is going up

Cost of food is going up

Andy Wilkinson, boss of 10-strong Clover Taverns, told the Publican’s Morning Advertiser that food prices are set to rise in the wholesale market with a knock-on effect down the chain.

Wilkinson quoted increases of up to 11% on frozen vegetables, 7% on chips and as much as 20% on other core menu items. He declined to name his supplier as they are currently in negotiation.

The largest buyer in the pub food market, Mitchells & Butlers (M&B) is also seeing food price rises of around 4%. In its most recent trading update, finance director Tim Jones said: “Our experience of food cost inflation is running at about 4%.
“We think that’s some way below what the market is.”

Wilkinson, whose Clover Taverns has seven value food venues, said he stood to lose out over the price hikes.
“I will have to look at what is on the menu and consider the prices,” he said. “I trade quite successfully in the value food market. Food sales this year have been up by 18% to 20% compared to last year — we have nailed the market and are doing well.

“These price rises mean we will have to change the menu concept and associated offers, such as buy-one-get-one-free. I would lose a good 2% to 3% on margin on my GP, if I just left things.”

Wilkinson speculated that if he lost customers due to menu price rises, it would be to their own homes, not to trade competitors.

Multiple operator Innventure, which has four food-led sites and is run by former M&B executive Chris Gerard, said it is combating a 12% rise in food inflation, particularly in meat, by using different cuts of meat and cooking techniques to avoid having to increase menu charges.

“It’s a pretty nasty upward spiral in costs,” he said. “What we’ve done is develop new ways of cooking, for example using a water bath and vacuum-packed meat for more slow-cooked dishes, so that we don’t have to increase menu prices or change our margins. We’re also using a bavette cut of beef instead of a rump steak.”

Brian Whiting of Whiting & Hammond, which has six food sites, said he has managed to stabilise costs by using different cuts of meat and having an “aggressive” approach with his suppliers.

Eating-out analyst Peter Backman, of Horizons, said operators were opting to use alternative products, such as beef instead of lamb, to keep food inflation costs to a “reasonable rate” of about 6% across the board. But he believes food prices will level off by the end of the year.

He said: “The question here is having a perspective on how much things cost. Sure, some items are rising so you have to cut your costs, but the point is not to cut quality.”

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