An Oct. 19 story titled “Rising food costs and supply chain issues are creating challenges” posted by the National Restaurant Association at https://restaurant.org/articles/news/rising-food-costs-and-supply-chain-issues takes a hard look at the latest challenges being faced by the foodservice industry.
The article noted, “The restaurant industry isn’t being spared from the array of supply chain issues that are currently impacting many sectors across the economy.”
In a September survey fielded by the association, “95 percent of operators said their restaurant experienced supply delays or shortages of key food or beverage items in recent months,” and the “impact was felt across all types of restaurants, with more than nine in 10 operators across each of the major segments reporting supply delays or shortages in recent months.”
The supply challenges, the story said, affected what restaurants could offer to customers. “Among operators that experienced supply delays or shortages in recent months, 75 percent said they made changes to their menu offerings as a result.”
The segment most like to be impacted was tableservice restaurants, and the story said that 88 percent of fine dining and 81 percent of casual dining operators said their menus had changed as a result of food supply delays or shortages.
“On top of the supply chain challenges, restaurant operators are paying higher prices for many of their food items,” the story said. “In the Association’s September 2021 survey, 91 percent of operators said their total food costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak. Only 3 percent said their food costs make up a smaller proportion of sales.”
The operators’ reporting of rising food costs was substantiated by the Bureau of Labor Statistics’ most recent wholesale price data, the story said.
“The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – jumped 12.9 percent between September 2020 and September 2021. That represented the strongest 12-month increase in more than four decades,” the story said.
Moreover, the story continued, “Due in large part to soaring food costs, profitability is down from pre-pandemic levels for the vast majority of restaurants. In the Association’s September 2021 survey, 85 percent of operators said their profit margin is lower than it was prior to the COVID-19 outbreak. Only 5 percent of operators said their profit margin is higher.”
And, it concluded, “Most operators also reported a deterioration of profitability during the last few months. Overall, 65 percent of operators said their restaurant was less profitable in September than it was in June. Only 6 percent of operators said their restaurant was more profitable than it was three months earlier.”
