The prices are high. It’s not surprising. Prices are up almost 10% at every store, from the grocery shop to the gas station. These price increases not only affect families and individuals, but also have significant implications for business owners.
Restaurants are also feeling the pinch when it comes to rising food costs. Other food suppliers, such as those that supply restaurants all across the country, are also affected by the rise in grocery prices. How are restaurants coping with the current storm? And when will it end.
Price increases in food
It is common to hear about inflation, higher prices, and other similar terms. However it can be difficult to understand these terms. You know that inflation is part of many economies. Everyone must deal with it and fight it. How does inflation today compare to inflation in years past?
The U.S. According to the U.S. Labor Department’s Bureau of Labor Statistics overall inflation has increased 8.3% in the past 12 months (ending August 2022). This may seem manageable given the past few years. The number is even more alarming when you break down inflation by type (e.g., food, energy, etc.). ).
Inflation in food has, for instance, risen to 11.4% during the same 12-month period. This is a significant increase. This number can be further divided. You should consider two types of food: food at home and away.
The inflation rate at the grocery shop is what food at home sees. This category has the highest inflation rate 13.5%. This means that American families now have the highest grocery bill in nearly three decades.
The outlook for food taken away from home is not much better. Fast food, restaurants and snacks from convenience stores all fall under this category. In this area, the inflation rate has risen 8% in the past 12 months. Restaurant owners and employees are also feeling the effects of food far from home.
The Reasons for the Rise in Food Prices
The first question that comes to mind when prices rise is, “Why?” It is difficult to pinpoint the cause of the current food crisis. There are many factors that contribute to the ever-increasing cost of food.
The world market and supply chain are still recovering from the global influenza of 2020. However, climate issues are also contributing to the increase. This year the United States was struck by severe Avian Flu. It means that there are less egg-laying chickens. Brazil saw record droughts in this year which have affected the coffee crop. The Russian invasion in Ukraine has also caused a severe rise in wheat prices.
It is difficult to keep up the food demand. A shrinking supply drives prices higher. Worst part? Food is vital. Consumers can’t stop buying food until the prices fall. It’s a perfect storm. The result? Higher prices for everyone.
Restaurants: The Effect
These price increases have affected every sector of the food industry. For example, restaurants are required to review what and how they offer their customers in order to remain financially viable. Restaurants can keep their prices consistent, but reduce the portion sizes in many cases. Burgers and pizzas are becoming smaller and smaller, which is a sign that these restaurants are the least expensive. This phenomenon is often referred to as “shrinkflation” by many consumers.
However, it’s not all bad news. Experts expect restaurants to do better in the face of high inflation rates. Many believe that restaurants will experience a surge in business due to the fact that food taken away from home is still less expensive than food bought at home.
Inflation will be around for the foreseeable future. This is a time for creativity and preparation, such as analyzing your restaurant menu and reengineering it.
There is a silver lining though because, as the saying goes “what goes up must come down”, and we hope this includes food prices.
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