Firms push up menu prices by 9%

17-Aug-2022 - Last updated on 17-Aug-2022 at 08:27 GMT

Rising costs: business leaders are also planning to increase menu prices by a further 6% over the next 12 months, according to the CGA and Fourth survey (image: Getty/NatashaPhoto)

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Business leaders have increased prices by 9% on average over the past 12 months with plans to hike them by a further 6% in the next year, research has found.

The latest Business Confidence Survey from CGA and Fourth also revealed almost three quarters (71%) of leaders have seen significant rises in energy costs, while three fifths (60%) reported food and drink price inflation.

Shortages in produce was also highlighted in the data with 81% of those surveyed having experienced reduce product lines and 62% have had items not being delivered or being delayed (51%).

However, despite the ongoing headwinds of rising costs, sustainability was still a priority for many operators with almost half (49%) of respondents were looking to reduce their carbon footprint with initiatives such as reducing energy waste or switching to renewable sources, consolidating deliveries, reducing waste, adding more plant-based options to menus and working with greener suppliers.

Ongoing supply disruption

Fourth managing director EMEA Sebastien Sepierre said: “The hospitality industry has had a torrid time over the past two and a half years and the ongoing supply chain disruption is the latest challenge businesses have had to contend with.

“Recent data published by Fourth indicates average overall costs are up 10% on 2019 and the average gross profit margin has fallen from 78% to 74% in the past 12 months.

“Leaning on the support of technology and smart solutions is one of the primary ways sector businesses can manage this ongoing crisis.

“Whether it’s directly comparing suppliers and costs, replenishing inventories, adjusting ingredients in menu items or simply uncovering what you need and when – smart tech can ease what is continuing to be an extremely tough time for our industry.”

Double whammy

The double whammy of cost and availability issues is piling huge pressure on operators’ margins, CGA business unit director for hospitality operators and food EMEA Karl Chessell said.

He added: “Combined with the growing cost-of-living crisis for consumers, it means trading conditions will be very tough over the remainder of 2022.

“Hospitality’s long-term future is bright but for now, leaders will have to find the right balance between absorbing soaring costs and passing them on to guests.

“The huge supply challenges also highlight the need for urgent and sustained Government support for the sector.”