From avian flu to the sterling crisis, the challenges facing the hospitality sector mean operators need to plan and cost Christmas menus as soon as possible, warns buying specialist Lynx Purchasing.
As Lynx Purchasing publishes the Autumn/Winter 2022 edition of its regular Market Forecast, hospitality businesses face the challenge of forecasting the impact of fragile consumer confidence, while managing their food and drink spend as costs continue to surge.
The latest official ONS figures show the headline rate of inflation at 10.1%, while Lynx’s own analysis for the Market Forecast show hospitality operators facing even higher rates of increase in many essential food categories, such as dairy and fresh produce. The official figures show the price of meals eaten out of home has increased by 10.4% year-on-year as operators pass on cost increases to consumers.
Rachel Dobson, Lynx Purchasing managing director, says: “From the turkey dinner right through to the cheeseboard, the price of many seasonal products is high as the peak trading season approaches. In addition, core menu items such as dairy, canned tomatoes and cooking oil, which are part of a wide range of recipes, are seeing continued increases and price volatility.
“It will take a strict focus on sensible, planned buying to protect margins and profits during one of the most challenging trading periods the sector has known.”
Dobson adds: “The sector has welcomed news of Government support for businesses on energy costs, with the promise of a further review of the scale of help needed to come, although the fall in the value of sterling means commodities traded in dollars, such as cooking oil, will now cost UK buyers more.
“In the meantime, the reality is that consumers are seriously feeling the pinch, and will think carefully about discretionary spend this year. The earlier operators can plan menus and update suppliers on their expected ordering levels for the peak Christmas and New year trading period, the better.
“That’s going to be a challenge, because although we know many consumers will be cutting back on spending, it’s not clear just how much that will affect hospitality spend this Christmas.”
The Lynx Purchasing Market Forecast combines official inflation data with exclusive insight from the range of specialist hospitality suppliers Lynx works with, providing detailed information on pricing trends over the crucial coming months.
Product areas highlighted in the latest edition include:
Poultry: The continuing impact of avian flu means that all poultry suppliers face additional challenges to meet demand, over and above the impact of generally increased costs. Turkey, which sees an annual spike in demand, is likely to be particularly impacted in terms of price.
Potatoes: This summer’s drought across much of Europe raised serious concerns about the size and quality of the 2022 potato harvest, and growers are reporting that the weather has had a significant impact on both the quantity and quality of the new season’s crop. As well as fresh potatoes, this will see price increases for frozen and chilled products, such as chips and roast potatoes.
Canned tomatoes: Widely used in catering, there are material shortages of canned tomatoes, and suppliers are seeing some previously agreed contracts cancelled. Availability will be a key issue, and where there are supplies, operators should expect significant price increases.
Dairy: Dairy producers have struggled to fully pass on the significant increase in costs, and as a result many have cut back on production. This has seen prices for milk, butter and cheese, as well as cream used for food manufacture, rise sharply this year, although the situation is now more stable. Egg supply is also impacted by avian flu.
Dobson adds: “The impact of high inflation, along with increased labour, energy and transport costs, and lower consumer confidence, are all part of the big picture that hospitality and catering operators have no choice but to endure in the run-up to the peak Christmas trading season, and into 2023. However, with a focus on disciplined buying there are significant costs that can be controlled.”
Lyns Purchasing’s buying tips in the run-up to Christmas 2022 include:
- Buy the most cost-effective pack size, whether a box, case, or tin
- Check orders carefully and report incorrect or damaged goods to the supplier, and make sure your account is credited
- Avoid delivery charges by meeting minimum order amounts
- Be organised, plan ahead and order in good time
- Avoid last-minute “lazy” or disorganised purchasing, so you order from the correct supplier.
Dobson adds: “This year, it will be more important than ever to plan a range of menu options at different price points. Clearly, not every group of customers will be confident to book a full Christmas dinner with all the trimmings. By also offering choices such as a two-course Christmas special or a buffet menu operators will be able to appeal to a range of customer budgets.
“Keeping suppliers in the picture, and letting them know in good time about reduced order levels, is a better strategy than placing last minute orders for stock that may not be available.”
Notes to editors:
Lynx Purchasing works with more than 2,200 accounts in the hospitality and catering sector, on a no-membership and no-contract basis that offers like-for-like products at lower prices and often better quality than operators could obtain by negotiating alone.
As purchasing professionals, Lynx works with leading suppliers in the hospitality and catering industry. These include specialist fresh food suppliers, wines & spirits, catering equipment providers, utilities, and specialist service providers such as telecom, business rates consultancy and waste management.
Issued on behalf of: Lynx Purchasing
By: ShielPorter Communications
Further information: John Porter: firstname.lastname@example.org / 07734 054389
Ros Shiel: email@example.com / 07841 694137