‘Chaos’ in hospitality supply chains likely to drive foodservice inflation, report warns

Increasing prices across foodservice over the coming months are threatening to stall the recovery of the hospitality industry, as problems in the supply chain and increased demand create ‘chaos’, a new report has warned.

The New CGA Prestige Foodservice Price Index (FPI) highlights the double whammy of acute labour shortages across the sector (notably HGV drivers, pickers, manufacturing and production staff) which has had a knock-on effect on stock. Post-Brexit difficulties in the imports of goods has compounded the problems, while shortages of packaging materials and harvest issues in other parts of the world have further contributed to the supply chain woes.

The report showed that price rises in some categories were significantly higher than the 1.2% in some key categories – soft drinks rose 8.0%, for example, while staffing  logistics and import costs have also risen.

Inflation was likely to continue well into 2022, with increase likely to be sharper in the short term, it warned.

Andy Hodgson, client manager at CGA, said that while the hospitality industry was making a robust recovery from the pandemic, these inflation figures threatened “to stall the momentum that businesses have achieved”.

“While consumer demand remains strong, the likelihood of steeper inflation puts already vulnerable businesses under renewed pressure, and reinforces the case for sustained support from government on tax, labour, supply chain and many more issues,” he said.

As a result, it is essential that operators are well in control of their supply chains in the run up to Christmas, Shaun Allen, CEO of Prestige Purchasing said, noting that it would be “a bumpy period for both cost and availability of product.”

“Good planning and communication will be critical to maintaining supply and profitability in this, the most critical trading period of the year,” he added.

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