Operators need to tackle the impact of food and drink inflation on their business.
According to buying specialist Lynx Purchasing, January will see a wake-up call delivered to many restaurants, pubs and hotels in the form of supplier invoices for products bought during the key trading month of December.
Rachel Dobson, managing director of Lynx Purchasing, said, “Most operators had set menus in place for much of December, taking them up to Christmas and through to the New Year weekend. With no choice other than to buy the products on the menu, and with trading brisk and money in the till, some may not have been looking too closely at the prices they were paying."
“They may now find that much of the profit margin they were forecasting from December sales has been eroded by lower GPs. That will be a sobering thought for many operators as they face the prospect of the quiet trading months of January and February and the expectation that food and drink inflation will continue to rise steadily throughout 2017. We know that a number of suppliers had to raise prices on key products during December – for example, dairy, and especially butter, has seen sharp price rises, and products imported from Europe have cost more as a consequence of the fall in the value of sterling. We’ve been able to negotiate on behalf of our customers to mitigate the impact, but many operators without access to specialist purchasing support will have seen significant increases in their buying costs, with more to come.”
For Peach Pubs, operator of 18 acclaimed food-led pubs, Lynx Purchasing has worked with suppliers to limit price increases on new menus being introduced in January. Founder Hamish Stoddart said: “Rachel has worked really hard on our behalf, so while our wholesalers have imposed price rises in some areas of the menu, it hasn’t been on the most important lines for Peach.
“This, along with Lynx’s expert negotiation, has got the increase down to something approaching OK, and in almost all areas of the menu, there won’t be any more increases until later in the year. I’m not celebrating, but I do believe it gives us a reasonable base for the first half of 2017. However, our suppliers are still under immense pressure and some of them will be losing money, so I expect more challenges later this year.”
Dobson added: “We have a long-standing partnership with Peach. Their chefs have buying lists and know which suppliers they have to order from across every area of the menu. That level of discipline is going to be essential for operators during 2017 and beyond."
“No business will be immune to the effects of inflation, but our priorities are to negotiate the best possible prices with suppliers for our customers; to put pricing agreements in place which allow operators to plan menus with confidence; and to continue to share our insight into pricing and market trends. It is now more essential than ever for operators to plan their menus effectively, price their dishes profitably, and work closely with suppliers to maintain purchasing discipline. Those who fail to act now could well find themselves struggling very soon.”
Lynx Purchasing works with more than 2,200 hospitality and catering operators to match them with suppliers and get the best possible prices on food and drink, as well as a whole range of essential products and services.
Do you know more about this story? Contact us anonymously through this link.