RESTAURANTS AFFECTED BY INFLATION

The restaurant industry is noticing product inflation due to the wide-reaching effects COVID-19 is having on supply chains. Increased shipping delays are driving up the cost of goods, and the foodservice industry is paying the price. With costs expected to still climb over the next year, restaurant owners are looking to local restaurant suppliers for support.

REVEALING COST TRENDS AFFECTING THE RESTAURANT INDUSTRY

Across the United States, some restaurant distributors are seeing an 8 to15 percent increase in costs across the board. According to industry analysts, beef costs have soared to unprecedented highs. About a year ago, Business Insider shared data that revealed typical beef cuts were up by as much as 87 percent. Today, overall beef, pork, and chicken prices have come off of their recent market high costs, and while we are seeing a sharp decrease in costs (beef as a whole is now around a 27 percent increase) we are still at higher levels compared to last year.

In addition to increased beef prices, the food industry is reporting increased protein costs nationwide:

Chicken

  Thigh meat 87%

  Breast meat 91% (74% in June 2020)

  Chicken wings 116% (55% in June 2020

Pork

  Pork belly 77% (53% in June 2020)

  Boneless pork butts 75%

  Spare ribs 38% (27% in June 2020)

However, it’s not just standard proteins that are on the rise. Restaurant owners are experiencing price hikes in the U.S vegetable oil industry and having to navigate unpredictable produce cost fluctuations.

WHAT IS CAUSING THE SPIKE IN FOOD COSTS?

The Washington Post cites, “A shipping container of goods has risen over 80 percent, since early November [2020], and has nearly tripled over the past year.” At the core of the current inflation are overall higher costs of goods and disrupted supply chains. These spikes are felt industry-wide, from restaurant operators to retailers. 

Here are a few factors contributing to increased costs:

• Higher feed costs
• Higher oil and transportation costs
• Higher labor costs
• Shortage of production workers and drivers
• Price volatility due to stockpile limits
• Lack of supply, due to increased demand

On top of COVID-19-related factors, environmental elements, such as unpredictable weather and its effect on crops, also contribute to the price increase.

LOOKING TO THE FUTURE: WHAT DO EXPERTS PREDICT?

Increased costs are expected to be the new normal through this year and likely into early 2022. A New York Times article, which examined global shipping problems and lack of containers, suggests that “containers will remain scarce through the end of this year.” What the COVID outbreak has revealed is the complexity of the supply chain, from containers to the labor force, to product availability. If any of those links in the chain break, then recovery can be slow.