Foodservice inflation expected to rise further, analysts warn
Inflation could go as high as 7%.
Following a prolonged period of inflationary pressure, price growth in the foodservice industry stabilised somewhat in 2024, but 2025 has seen a return to rising prices, according to Meaningful Vision Price Intelligence.
Foodservice inflation in 2024 held steady at 5%, a significant cooling from the highs of 13% observed in late 2023. Data for January 2025 indicates a resurgence of inflationary pressure, with retail prices rising to 3%, up from 2% at the end of 2024, and foodservice inflation climbing to 6%, the highest level since early 2024. Further price increases are expected in the coming months.
Labour costs
The UK is experiencing escalating labour costs influenced primarily by new legislation. Key contributors include Increases in Employer National Insurance Contributions (NICs) and Rising National Minimum Wage. ‘UK Hospitality’ estimates labour costs could increase by as much as 10%. Meaningful Vision anticipates cost increases in the year ahead of 1% to 4% across retail, fast food, and casual dining.
For an industry reliant on a large workforce, the hike in costs is too substantial for restaurants to absorb on their own, particularly independent and small businesses who already operate on thin margins. Consumers are likely to baulk at swallowing the increased costs since household budgets are already stretched. Even in fast-food, traditionally the most affordable segment, traffic growth has stagnated over the last twelve months.
Meaningful Vision anticipates that dine-out prices will rise faster in the coming year, making it a less attractive option for many. In a worst-case scenario, where most of the growing operating costs are passed on to consumers through price increases, inflation in the foodservice sector could rise to as much as 7%.
Delivery vs dine-In
Both dine-in and delivery showed a steady slowdown in price growth over the past five quarters. In Q3 2023, dine-in prices were 15% higher than the previous quarter, whilst delivery prices saw an even steeper increase at 20%.
In 2024, dine-in price growth declined from 8% in Q1 to 4% in Q4. Delivery prices followed a comparable trajectory, falling from 10% in Q1 2024 to 5% in Q4 2024. The narrowing gap between the two categories indicates a potential stabilisation of price pressures, possibly due to easing inflation and lower operational costs or the effects of competitive pricing strategies within the foodservice industry.
Delivery prices remain 18% higher than dine-in. With further inflation growth, delivery will become less affordable, which may lead to reduced orders. This will likely drive delivery platforms to introduce promotional offers to stimulate demand.
Ingredient costs
In January 2025, Cold Drinks with 8%, Salad with 6%, and Savoury Bakery with 6% were the fastest-growing food categories.
The UK’s restaurant industry has already been impacted by rising costs of key commodities, but in 2025, the highest price increases are expected on beef and coffee.
Prices paid to farmers are at a record high per kilo, recorded in February, according to the Agriculture and Horticulture Development Board. Declining cattle numbers, reduced slaughter rates, and increased production costs are amongst the key reasons for beef price increases.
Global coffee prices have soared to their highest in nearly 50 years due to poor weather in Brazil and Vietnam, forcing roasters to raise prices. Big roasters like Nestle or Starbucks tend to buy coffee many months in advance, which means consumers won’t see price increases for 6 to 12 months.
“The stabilisation in 2024 provided some relief for consumers, but data from early 2025 suggests businesses may need to reassess pricing strategies in response to new inflationary pressures. Restaurants and foodservice operators must stay agile, balancing cost management whilst maintaining customer affordability.” Maria Vanifatova, the CEO of Meaningful Vision LTD, said.
