Compass chief executive Richard Cousins has warned the supply chain not to overdo food price hikes.
Speaking at the first Arena Savoy Lecture following the refurbishment of the iconic hotel, Cousins told an audience of catering operators and suppliers that too much inflation was bad for business.
He said: "Those of us towards the bottom of the chain can only absorb so much inflation to our cost base.
"It will drive our efficiencies of course, but in the end significant inflation demands the client and consumer pays more. We have no choice but to pass some of it on.
"If prices go too high, virtually everyone loses out."
Cousins also urged the Government to consider the financial benefits of outsourcing, pointing out that just a quarter of healthcare and a third of education catering is currently contracted out.
He said that "hundreds of millions of pounds" could be saved for the taxpayer every year if outsourcing trends were accelerated.
The Arena Savoy Lecture, which took place earlier this week in the Lancaster Room, was the first since industry luminary Prue Leith took to the lectern in 2007 ahead of the hotel's closure that spring. It reopened last October following a £220m refurbishment.
More than 350 industry figures were in attendance, making it the largest Arena event in the past five years.
By Janie Stamford
E-mail your comments to Janie Stamford here.
If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to www.caterersearch.com/tabletalk
Looking for a new job? Find your next job here with Caterersearch.com jobs