Increasing food costs on the way, says food procurement expert

This year has seen both turbulence and uncertainty. Foodservice has experienced steep cost increases in many areas:

• HGV driver shortages – over 100,000 vacancies nationally
• Increased driver wages to counteract these shortages – up 15%
• Agency staff and courier costs – up 37%
• Commodity cost increases
• National Living Wage increases
• Increasing fuel and utilities costs:
  • Electricity has increased 56% year to date
  • Gas has increased 51% year to date

Since March, inflation has been sharply and consistently ascending. It has hit the highest levels seen in around three years, since the peaks of 2017 and 2018. The Bank of England are forecasting inflation rates to remain close to 2% for 2022, 2023 and 2024.

Whilst ONS CPI food inflation eased slightly for July, there is a lot of commentary to suggest it’s the calm before the storm. There are underlying factors that indicate increasing food costs are on the way: with significant rises at a commodity and farmgate pricing level and, in May, the UN Food and Agriculture Organisation’s (FAO) global Food Price Index increasing at its fastest monthly rate for over a decade.

As experts in food procurement and supply chain management, specialising in independent education, allmanhall are working with school suppliers on price increase mitigation wherever feasible and to ensure the inevitable changes will be as low as possible for clients. Even so, the unavoidable likelihood of food cost inflation over the coming period is high. Costs are on the rise and the impact on foodservice is already – and is likely to continue to be – significant.

The start of September, with the back to school period, is always a pressurised time for the whole food supply chain, as the majority of all schools in England go back within a few days of each other. This year it, unfortunately, will be even more challenging. The HGV national skills shortage is a multi-industry challenge, heavily impacting just-in-time supply chains like food, and therefore all types of catering and foodservice operations, from education to workplace dining, from leisure to healthcare.

It has had ramifications on both the inbound logistics to catering suppliers and their own outbound delivery capabilities. Naturally there was a reduction in demand over the school summer holidays and allmanhall are aware that many suppliers have plans in place to recruit drivers in the short-term. However as leading food procurement specialists, allmanhall are advising that there will be disruption and recommend the following action to school catering teams:

• That ongoing orders are again placed with as much lead time as possible.
• If you have space to increase your stock holding this autumn, do so to mitigate any delivery shortages.
• Where possible, order full cases rather than splits.
• To remain as flexible as possible to enable coping with change at short notice.

To understand what this may mean for your food budget and explore the never-more-essential support a procurement partner can provide, visit allmanhall.co.uk