Operators focused on winning their share of customer spend in the run-up to Christmas must start giving serious thought to the bigger challenge of trading through the first few months of 2018, warns buying specialist Lynx Purchasing
The newly published Autumn/Winter 2017 edition of the Lynx Purchasing Market Forecast offers little comfort to hospitality and catering businesses hoping for a let-up in food & drink inflation. The ‘Lynxometer’, a measure of inflation based on a basket of regularly purchased products, rose to 8% in September compared to 6% in the Summer Market Forecast.
Rachel Dobson, managing director of Lynx Purchasing, says: “Hospitality and catering operators are now pretty much geared up to deal with higher prices from food and drink suppliers this Christmas – but very few have started to plan for the challenges of trading in the New Year.
“Most of the businesses we work with have priced their Christmas menus to take higher costs into account, in the knowledge that there is usually enough trade to go round at the busiest time of year.
“What’s more of a concern is that many of the operators we speak to aren’t giving enough thought to the challenges of the first few months of 2018, when it’s very clear that inflationary pressure is going to continue.”
The Market Forecast includes a warning that Christmas turkeys will be more expensive this year, with the National Farmers Union estimating that the overall costs for UK turkey producers are up by an average of 6.6%. Other product areas highlighted in the latest Market Forecast, based on insight from the range of suppliers Lynx works with, include:
- Dairy: Up 18% year-on-year. With dairy production low, operators can expect to pay higher prices for butter, cream, cheese, desserts and bakery products. Dairy producers are gearing up to increase supplies, but this is unlikely to have an impact on prices before next year, especially as high demand for dairy from Asia continues.
- Meat: Up 6% year-on-year. Beef production has also been affected by higher dairy costs, as some farmers reduce the amount of cattle they send to slaughter in order to focus on milk. Strong global demand for beef means supplies from the US and Brazil are also commanding high prices. Continued demand for pork from China and lower EU production is pushing up prices of menu staples such as bacon and sausages.
- Fruit & Veg: Up 5% year-on-year. With southern European producers looking to recoup losses from last year’s poor crop, imported vegetables including broccoli, cauliflower, peppers, tomatoes, and salad leaves are expected to cost more. However, British-grown root vegetables will remain at their best in terms of price and availability into the first quarter of 2018.
Dobson adds: “Trade is always quiet in the New Year, but with all the indicators showing a further slowdown in growth and consumer spending under pressure, any business that doesn’t have its supplier costs firmly under control will struggle to compete for customers.
“With industry analysts forecasting that we’ll see increased use of targeted deals, vouchers and special offers in order to encourage customers to eat out in 2018, operators need to look at every area of their spending and be ready to change suppliers where necessary, in order to get the best in terms of both price and quality.”