Fewer than 1 in 3 sites admit passing costs on to customers

By Gary Lloyd

- Last updated on GMT

Absorbing costs? Many hospitality sites are reporting the prices they pay for goods and services has risen (credit: Getty/AleksandarNakic)
Absorbing costs? Many hospitality sites are reporting the prices they pay for goods and services has risen (credit: Getty/AleksandarNakic)

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More than two thirds of pubs and bars are reporting the cost of drinks and food they buy rose in January versus December but fewer than one in three has admitted to passing these costs on to customers.

According to the Office for National Statistics (ONS), 69.4% of businesses in the ‘food and drink services’ sector, which includes pubs, bars and other hospitality sites, have said their outgoings have risen but only 29.2% have said they have passed those costs on to customers.

All sectors in food and drink have been reticent in saying they have passed these costs on to customers but the disparity is largest in the food and drinks services category, according to Recent trends in UK food and drink producer and consumer prices: January 2023report​.

Retailing sector

In ‘food and drink retailing’, which pertains chiefly to the off-trade, such as supermarkets and off-licences, some 65.1% of businesses have said they have suffered increases in the prices they pay for goods and services but 63.7% stated they have passed the costs on to their customers.

In ‘food and drink wholesaling’, which is selling food and drink in bulk, 66.8% of businesses have reported a hike of in what they pay while 49.6% admit they have sold those costs on to customers.

The report stated: “Price increases are asymmetric across the food and drink supply chain with manufacturers, wholesalers and retailers (excluding microbusiness) more likely to report passing prices on than service providers (for example, pubs, bars, restaurants and cafés).”

Proportions down from March 2022

It continued: “In January 2023, just over half of businesses in the food and drink manufacturing industry (56.2%) reported an increase in the price of goods or services bought compared with December 2022. Around two thirds (65.1%) of food and drink retailers reported prices bought increased on the month over the same period. This was higher than all businesses (excluding microbusinesses) with just under half (45.2%) reporting prices bought increased. These proportions are all down from when this question was asked in March 2022.

“When asked about the prices of goods or services sold by their businesses (excluding microbusinesses) relative to the previous calendar month, a similar proportion of food and drink retailers reported their prices sold increased (63.7%) compared with prices bought increased (65.1%) in January 2023.

“However, only around one third (27.8%) of food and drink manufacturing businesses reported increasing the price of the goods and services sold by their business. The same is true for food and drink service providers, with a lower proportion of businesses reporting an increase in prices sold (29.2%) relative to prices bought (69.4%) compared with December 2022.”

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