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Morning Briefing for pub, restaurant and food wervice operators

Mon 18th Jul 2022 - Hospitality food costs soar up to 40% as supply chain fragility hits operators hard
Hospitality food costs soar up to 40% as supply chain fragility hits operators hard: Food costs for hospitality businesses have soared by up to 40% as supply chain fragility hits operators hard, according to new research. A new report by hospitality software provider Fourth showed the hardest hit commodities are dairy (costs up by 40%), grains (up 35%), meat (up 35%), fish (up 25%) and fruit and vegetables (up 20%). Average overall costs are up by 10% compared with 2019. Food costs are up by about 13%, while drink costs are up by 8% over the same period. In the 12 months to May 2022, average gross profit has fallen by four percentage points, from 78% to 74%. Factors behind the rising costs include UK inflation at its highest since the 1980s, labour shortages and the consequential wage increases across the supply chain, import cost increases and the lack of availability of products due to a shortage of shipping and flights, the war in Ukraine, and suppliers being unable to source goods or even trade at all. It has led to operators deeply analysing supply chains models, with many combating the issues by turning to technology, streamlining their supplier base, and adapting recipes on their menus. Kate Nicholls, chief executive of UKHospitality, said: “These stark figures highlight the extent of the damage that rising costs are having on the hospitality and leisure market, engulfing and suffocating businesses and consumers alike. 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. 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.” Sebastien Sepierre, managing director – EMEA, Fourth, added: “After enduring the shock of enforced closures, followed by the stop-start nature of trading during the pandemic, the hospitality industry now has another major challenge to confront in the form of supply chain disruption. The complexities are such that most operators have never seen anything like this before.”

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