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Food becomes restaurants' second biggest expenditure

03 | 05 | 13

Food prices have overtaken rent and rates to become restaurants' second biggest expense in the last six months. 

This is according to the fourth Livebookings European Dining Index, which is based on industry data and interviews with 200 UK restaurants. Its research found that food costs are now second only to staff wages and this could impact the amount companies choose to spend on new catering equipment.

Three-quarters of respondents claimed the price of food has had the biggest effect on menu costs in the last two quarters. Nearly nine in ten restaurants reported a rise in their food bill over the past six months and a similar amount cited it as their biggest cost increase. 

Such is the growth of food prices that it has now become the biggest expenditure for nearly a quarter of the survey's respondents. One of the main reasons behind this is extreme weather conditions, which have damaged harvest yields for over a year and driven up the price of wheat, dairy and meat. 

To try and get around this problem, restaurants have frequently altered menus as they react to cost changes, increased their efforts to source locally as a way to control prices and re-structured relationships with suppliers. There is also a greater need to communicate changes with customers. 

“They have survived the recent economic decline and are seeing improvement in the number of customers through the door, but many restaurants operating today are still facing a daily mission to maintain a sustainable profit margin," commented Colin Tenwick, chief executive of Livebookings.

He claimed the rising cost of produce creates a need for companies to constantly reassess their supply chain and what they offer to consumers. 

"No doubt the industry will show its characteristic resilience and creativity to overcome the challenge and it’s likely we’ll see a rise in things like single concept restaurants as restaurant owners aim to tightly control their cost centres and protect their margin.”

John Dyson, food adviser at the British Hospitality Association - which reported Livebookings' findings - said the problem is probably here to stay.

He stated: "The cost of food is unlikely to stop rising. The hospitality industry is widely aware of the need to constantly scrutinise their menus to find ways to cut out waste and reduce the costs of the raw materials."

Mr Dyson claimed it is important to improve training and skills across the industry, so that businesses are in a position to meet these challenges. 

He advised restaurants to better understand the expectations of their customers about quality and quantity, so they can deliver a great guest experience at the right price point.

The Livebookings report also revealed that more people are making restaurant bookings using the internet and mobile devices. 

By the end of 2012, a third of online bookings were made on smartphone and tablet devices, up from 13 per cent in 2011. This figure is expected to rise considerably in the next few years. 

However, only 39 per cent of restaurants currently optimise their website for mobile and just 71 per cent take online bookings.ADNFCR-16001031-ID-801581419-ADNFCR


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