Shortages lead to price hikes

Sat near the entrance to the New Forest Inn, near Lyndhurst, enjoying an early evening pint of local beer and an expected quiet read of my newspaper, I was continuously interrupted by visitors popping their heads around the door enquiring about a table for dinner and being told the place was fully booked. This process was repeated via the pub’s phone.

Clearly this attractive-looking venue was very popular with both locals and tourists, and therefore tough to get into, so the following night we chose to instead dine at the nearby, much larger pub The White Swan, which did not look too packed on our arrival. Everything was fine apart from having to wait almost 90 minutes for our food.

It transpired that the New Forest Inn was not actually that busy but had halved the number of bookings it was willing to take because of the chronic shortage of staff. Meanwhile, The White Swan had seemingly been more relaxed about its service levels and not limited the bookings it was willing to take even though the kitchen was clearly going to struggle with even a half busy pub. 

This staff drought has led to drastic measures by some operators who do not want to overwork their teams nor do they want to reduce the level of experience for customers. Le Gavroche has cancelled all lunch services from mid-June for the foreseeable future and St Austell Brewery has initiated a temporary decrease in its food service hours and opening hours in some of its managed pubs.

If finding staff was the only problem, it would be bad enough, but it seems there are shortages of pretty much everything. Whether it is computer chips, commodities, cars, utilities, food stuffs or any other materials you care to think of, there are shortages on the back of an incredible uptick in global demand. As the world moves out of lockdowns, supply chains, which in some cases have merely been ticking along for the past 18 months, now have to attempt to deal with an incredible surge in demand.

Needless to say, this is going to have a meaningful impact on the food and drink industries. For starters, costs have clearly shot up as result of this pressure on supply chains. The price of edible oil, from oil palm trees, has jumped 135% during the past year to record levels, soybeans have hit prices last seen a decade ago, sugar is up 58%, corn futures hit their highest level for eight years, and wheat futures moved up to their highest point since 2013.

This has led to menu price increases at many restaurants, with 30 out of 50 venues analysed on the Internet Archive found to have bumped up prices since they closed for lockdown last autumn. Cote Brasserie, for instance, has increased the price of its moules frites from £12.95 to £13.95 and its chips have jumped 27% from £2.95 to £3.75. 

For many restaurants such price increases will no doubt have to be undertaken alongside more creative activity such as adapting their menus. Kevin Georgel, chief executive of St Austell Brewery, says the company has reduced the size of its menus compared with 2019 and rationalised its supplier base while Starbucks has announced it is to cut 25 menu items and ingredients. Meanwhile, renowned chefs Richard Corrigan and Chris Galvin have also talked of the benefit of leaner, more conservative, smaller menus with the resultant fewer ingredients to purchase and prep. 

The creation of dishes in restaurants is clearly based on multiple factors including the chefs’ creativity and price-points but, with supply chains upended, we might be in an era when it is as much about producing goods based on what parts are available rather than on any other predilection or metric. Buying more locally and seasonally will undoubtedly come to the fore. 

Even though things are opening up (let’s see what happens with 21 June) there are clearly still many challenges ahead but, thankfully, the foodservice industry has been tested to the limits of its creativity over the past year or so and it has certainly not been found wanting in any department whatsoever. It’s easier said than done I know, but there just needs to be a little bit more of the same to see out these final obstacles.

Glynn Davis, editor of Retail Insider 

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.