A new report reveals that, on average, costs are up by 10% compared to 2019. The hardest hit commodities are dairy (costs up by 40%), grains (+35%), meat (+35%), fish (+25%) and fruit and veg (+20%).
Food costs are up by approximately 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 unparalleled supply chain crisis include the surge in utility and fuel prices, 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 combatting the issues by turning to technology, streamlining their supplier base, and adapting recipes on their menus.
“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,” says Kate Nicholls, chief executive of UKHospitality.
“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.
“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’s report comes after the latest CGA by NielsenIQ and Prestige Foodservice Price Index warned last week that foodservice inflation may rise further having topped 10% for the fourth successive month.
Sebastien Sepierre, managing director – EMEA, Fourth, describes the supply chain crisis is one of the most pressing concerns within the sector, and says it is imperative that operators have the tools at hand to understand and address the challenge of overcoming the disruption.
“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.”
