Hospitality F&B cost climbs again in April

Global commodity market volatility and supply chain disruptions were the main drivers.

The price of the Index’s overall basket of goods rose by 2.3% year-on-year and by 0.6% month-on-month, driven by global commodity market volatility, persistent supply chain disruptions, escalating energy costs and the significant impact of adverse weather conditions, according to the latest CGA Prestige Foodservice Price Index report.

Several categories have experienced significant increases, with the meat & poultry category seeing rises affected by strong demand for beef and ongoing challenges in poultry production. The oils & fats category is also rising, influenced by high demand for soy and rapeseed oils, while the mineral water, soft drinks & juices sector also saw higher levels of year-on-year inflation.

The fish category, whilst showing a modest year-on-year increase of 0.4%, recorded a sharp 2% rise month-on-month. This is largely attributed to severe declines in hake stocks and significant quota reductions for cod in key fishing grounds, which are expected to lead to sustained high prices and a shift towards alternative white fish species. Furthermore, the driest spring in a century has begun to impact root vegetable yields, indicating potential price increases later in the season for this category, which saw a 0.6% annual increase.

“The April data underscores the complex landscape our hospitality clients are navigating. While we've seen some seasonal variations, the underlying inflationary drivers remain firmly in place. Categories such as meats, oils & fats and soft drinks are experiencing higher levels of inflation year-on-year, whilst critical staples like fish are seeing sharp month-on-month increases, driven by concerning stock declines and quota reductions. Whilst inflation has remained relatively low over the past 12 months, we are now seeing upward pressure coming through in a number of categories and it is important for operators to mitigate these impacts through strategic procurement and supply chain optimisation,” Shaun Allen, CEO of Prestige Purchasing, said.

Reuben Pullan, senior insight consultant at CGA by NIQ, said that news of an uptick in key food and beverage costs in April is another unwelcome development for hospitality operators and their suppliers.

“Alongside a sharp increase in labour costs from April, it ratchets up the pressure on both profit margins and menu prices for consumers. Warmer weather has boosted trading in pubs in particular over the late Spring, but better government support is urgently needed to help the sector sustain investment and protect jobs,” Pullan said.