Hospitality business to raise prices due to supply chain and rising costs

By Michelle Perrett

- Last updated on GMT

Cost increase: Nearly three quarters (73%) of leaders say their food costs have risen (image: Getty/Jonathan Kitchen)
Cost increase: Nearly three quarters (73%) of leaders say their food costs have risen (image: Getty/Jonathan Kitchen)

Related tags: Supply chain, Beer, Public house

Three quarters of hospitality businesses are likely to raise prices for consumers as a result of the supply chain problems and rising costs, the latest Business Confidence Survey from CGA and Fourth has revealed.

The poll of industry leaders found that 99% of businesses are currently experiencing supply chain issues, with nearly nine in 10  (88%) facing reduced product lines. More than four in five have seen deliveries of products delayed (82%) or failing to turn up completely (84%).

These supply issues have driving inflation in many key cost areas, with more than four in five seeing higher costs in their supply chain (82%). 

Nearly three quarters (73%) of leaders say their food costs have risen, with 39% of them stating that food costs have significantly increased. Nearly as many have faced increases in the costs of drinks (70%) and access to products from Europe has been a particular issue, with 68% of leaders identifying it as a major area of concern. 

Spiking costs

Costs are also spiking in other areas, with a similar proportion (72%) of leaders reporting increases in sundries like cleaning supplies and disposables.

The survey has also revealed that around two-thirds have seen rises in the costs of sub-contracted services such as builders, cleaners or entertainment (68%), and of utilities (64%).
 
While some business leaders hope to absorb rising costs, three in four (76%) say they will have no choice but to pass them on to consumers by increasing their prices. 

“Brexit and Covid-19 have dealt two painful blows to the food and drink supply chain, and few hospitality businesses have escaped the impacts,” said Karl Chessell, CGA’s director of hospitality operators and food, EMEA.

Delivery problems

“Delivery problems and cost pressures have come at the worst possible time, with thousands of pubs, bars and restaurants only just finding their feet after months of lockdown. This two-pronged crisis highlights the need for targeted government intervention and sustained support to protect thousands of businesses and jobs in the months ahead.”
 
Sebastien Sepierre, managing director – EMEA, Fourth, said: “The survey paints a very stark picture of the supply chain crisis that is severely impacting hospitality businesses right now. Many in the sector are concerned about how it will impact this year’s festive season, particularly in light of the fact last year’s Christmas trading was severely curtailed by Covid restrictions. We will be working very closely with our customers and their supply chain from a procurement, workforce and planning standpoint, to help them best prepare for and tackle these ongoing challenges in the weeks and months ahead.”
  

Related topics: Food trends

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