Operators’ food costs soar by up to 40%

By Amelie Maurice-Jones

- Last updated on GMT

Price hikes: Sector suffers with soaring food costs due to supply chain disruption (Getty/ Henrik Sorensen)
Price hikes: Sector suffers with soaring food costs due to supply chain disruption (Getty/ Henrik Sorensen)

Related tags Food Finance Fourth ukhospitality

Spiralling costs and supply chain disruption are having a dramatic and unprecedented impact on hospitality operators’ food and drink bills, new research from Fourth has revealed.

The report, by the hospitality and leisure industry software provider, highlighted how the pandemic aftermath and war in Ukraine had created unprecedented supply chain issues.

The hardest hit commodities were dairy (costs up by 40%), grain (plus 35%), meat (plus 35%), fish (up 25%) and fruit and veg (up 20%).

In addition, average costs are shown to be up 10% versus 2019. Food costs are up by approximately 13%, while drink costs are up by 8% over the same period.

What’s more, In the 12 months to May 2022, average Gross Profit has fall by 4% from 78% to 74%.

Unprecedented challenges

Factors behind the supply chain issue crisis include the surge in utility and fuel prices, record inflation rates, labour shortages and wage increases across the supply chain.

Import cost rises and the lack of available products due to a shortage of shipping and flights are also having an impact. This has led operators to analyse their supply chain models, with many combatting issues by turning to technology, streamlining their supplier base and adapting recipes.

UKHospitality chief executive Kate Nicholls said the figures highlighted the extent of the damage rising costs were having on hospitality, suffocating businesses and consumers alike.

She continued: “After more than two years of unprecedented challenges due to Covid, cost inflation now poses a massive threat to our industry and the wider economy.

“The impacts of rising costs are being felt across every facet of running a hospitality business, including on jobs and recruitment, economic stability, business viability, consumer confidence and willingness to spend."

Crucial support

She added: “It’s absolutely crucial that the sector receives as much support it can get – without it, more and more businesses and jobs will fall away.”

Fourth managing director, EMEA, Sebastien Sepierre said after the shock of closures and the stop-start nature of trading during the pandemic, supply chain disruption poses another major challenge for hospitality.

“Technology has a huge role to play in helping operators contend with the instability within the supply chain,” Sepierre added.

He continued: “ It is the most efficient way of comparing suppliers, checking the availability of products, analysing price fluctuations, and knowing exactly what you need and when you need it in your venues.

“The supply chain crisis is one of the most pressing concerns within the sector and it is imperative that operators have the tools at hand to understand and address the challenge of overcoming the disruption.”

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