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Food cost rises continue to plague restaurant and food service operators

29 July 2008 by
Food cost rises continue to plague restaurant and food service operators

Food service and restaurant operators were hit by a near 10% in food costs in June with further price hikes still to come, research revealed today.

Latest figures from consultancy Horizons show that food costs rose by 9.3% in June with increases experienced across all sectors. Restaurants were particularly hard hit last month with prices rising 11%, largely due to their dependence on fresh food.

Foods showing the biggest price rise include eggs (up 37% over the past year), butter (32%), and oils and fats (24%).

Peter Backman, managing director at Horizons, said: "Food commodity prices have grown by 40% over the past year. This takes several months to be reflected in the prices paid by foodservice operators, so there are still months of prices rises in the pipeline.

"The good news is that food commodity prices have stabilised over the last few months, so some relief is in sight for operators in the longer term."

Food price inflation has come at the worst possible time for hospitality operators, as consumer spending is also dropping, warned Backman.

"Because consumers are also feeling the pinch in the current climate, food operators are having to take a hit on their margins rather than raising prices to mitigate costs," he said. "For many this potentially wipes out profits altogether."

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