Restaurants and other food-led venues have struggled since the start of the pandemic and despite murmurs of costs abating, headwinds continue to put the hospitality industry’s recovery on hold.
Foodservice price inflation rose by 22.6% in June, nearing the record high of 22.9% recorded in December last year, according to data from the CGA.
Representing a 2.2% increase month-on-month, the growth of prices in the industry is outpacing supermarkets at almost five times the speed.
“Retail food markets are more consolidated than hospitality, with the top ten supermarkets owning 75% of the market, and they are able to exploit their scale with sophisticated contracting and controlled distribution,” said the CGA.
Conversely, the hospitality industry buys through numerous wholesalers resulting in less contractual price protection, lower scales of purchase and increased volatility, like when prices are affected by the failure of a Black Sea grain corridor.
Suppliers also are looking for a period of “respite” as global prices ease, having had to deal with high costs and small margins for some time, CGA believes.
Just how much “respite” suppliers need may be a topic of debate, however, especially considering the FAO World Food Price Index, which tracks various global commodity prices, has been falling for well over a year.
Even if costs for the industry do begin to mellow, changes to licensing rules and further taxing on alcohol could prove yet another hurdle for the struggling sector – and that’s before the impact of high-interest rates on consumer spending.
One in eighteen hospitality venues shut for good in the last year and even though closures have slowed slightly in the last six months, stubborn inflation remains a disease which is eating away at the industry.