According to the latest CGA Prestige Foodservice Price Index, food prices for hospitality businesses in the UK experienced a significant increase of 2.2% in June. This surge was more than five times higher than the corresponding increase seen in supermarkets during the same period.
The year-on-year data showed an even more dramatic scenario. In June 2023, the inflation of hospitality food prices soared by 22.6% compared to June 2022, nearly reaching the record high of 22.9% witnessed in December 2022.
One of the key factors contributing to the discrepancy between the rise in hospitality food prices and supermarket food prices, as stated by CGA, is the more “consolidated” nature of the supermarket industry. The 10 major supermarket chains hold 75% of the market share, allowing them to leverage their scale and exert tighter control over distribution, thereby mitigating cost increases.
On the other hand, pubs, bars, and restaurants typically procure food and ingredients from multiple wholesalers, resulting in reduced scale and increased volatility in cost fluctuations.
The impact of these surging food prices is not only felt by hospitality businesses but also extends to diners who are likely to face higher bills. As businesses struggle to absorb further operating cost increases, they have been forced to raise prices. A recent study revealed that energy costs, which surged following the Russian invasion of Ukraine, accounted for about a third of the total restaurant bill.
The frequency of price increases has become so common that some establishments have even taken the drastic measure of abandoning printed menus in an attempt to keep up with rapidly changing costs.
