Food price inflation is the biggest challenge for 81% of operators

By Nikkie Sutton

- Last updated on GMT

Up to date: keeping offers fresh can help drive footfall, according to CGA commercial director Graeme Loudon
Up to date: keeping offers fresh can help drive footfall, according to CGA commercial director Graeme Loudon

Related tags: Foodservice price inflation, Cost, Inflation, Austrian school

The rising cost of ingredients is the number one challenge for operators, according to a survey from data experts.

CGA commercial director Graeme Loudon told delegates at the Tackling Food Prices ​conference at the W Hotel in west London that to battle against this rise, there needs to be a focus on customer experience.

The second biggest challenge - according to 78% of the 160 chief executives, managing directors, chairmen and other senior directors and management in the out-of-home eating and drinking sectors, which responded to the CGA Confidence Survey 2017 - was business rates.

This was followed by the fall in the value of the pound sterling (73%), increased costs of imported goods (70%) and increased staff costs (also 70%).

After this came decreased staff availability and the impact of terrorism, according to 56% and 45% of those surveyed respectively.

Inflation rise

The smallest concern for operators was rising rental values, which was a worry for 33% of respondents.

The latest CGA Prestige Foodservice Price Index revealed wholesale foodservice price inflation grew to 9.3%​ in August this year, reversing two months of falls.

It was also ahead of historical averages throughout the summer months, and significantly higher than consumer-side inflation as measured by the Office of National Statistics.

Levels of inflation in August were higher in nine of the 10 categories of food and drink measured by the index, year-on-year.

Key drivers causing inflation included the weak pound, which was pushing up the price of imports from overseas, and rising oil prices, which are adding to the costs of transportation and packaging.

Experience important

Loudon said: “The biggest challenge that is facing many operators in our market is rising raw-material costs.

“It is the number one issue, according to 81% of business leaders that have been affected by the cost of raw materials and ingredients in 2017.”

He advised the operators of the need to drive demand to provide an experience for consumers to mitigate the rising costs.

Loudon added: “The eating out market in the medium term is becoming increasingly flat in the medium term meaning that it is increasingly becoming a market share game.

“Therefore, it is important to keep offers fresh and up to date to ensure footfall.”

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