May 10, 2021
Updated July 2021.
The restaurant industry is noticing product inflation due to the wide-reaching effects COVID-19 is having on supply chains. Increased shipping delays are driving up the cost of goods, and the foodservice industry is paying the price. With costs expected to still climb over the next year, restaurant owners are looking to local restaurant suppliers for support.
Revealing Cost Trends Affecting the Restaurant Industry
Across the United States, some restaurant distributors are seeing an 8 to15 percent increase in costs across the board. According to industry analysts, beef costs have soared to unprecedented highs. About a year ago, Business Insider shared data that revealed typical beef cuts were up by as much as 87 percent. Today, overall beef, pork, and chicken prices have come off of their recent market high costs, and while we are seeing a sharp decrease in costs (beef as a whole is now around a 27 percent increase) we are still at higher levels compared to last year.
In addition to increased beef prices, the food industry is reporting increased protein costs nationwide:
Chicken
Thigh meat 87%
Breast meat 91% (74% in June 2020)
Chicken wings 116% (55% in June 2020
Pork
Pork belly 77% (53% in June 2020)
Boneless pork butts 75%
Spare ribs 38% (27% in June 2020)
However, it’s not just standard proteins that are on the rise. Restaurant owners are experiencing price hikes in the U.S vegetable oil industry and having to navigate unpredictable produce cost fluctuations.
What is Causing the Spike in Food Costs?
The Washington Post cites, “A shipping container of goods has risen over 80 percent, since early November [2020], and has nearly tripled over the past year.” At the core of the current inflation are overall higher costs of goods and disrupted supply chains. These spikes are felt industry-wide, from restaurant operators to retailers.
Here are a few factors contributing to increased costs:
- Higher feed costs
- Higher oil and transportation costs
- Higher labor costs
- Shortage of production workers and drivers
- Price volatility due to stockpile limits
- Lack of supply, due to increased demand
On top of COVID-19-related factors, environmental elements, such as unpredictable weather and its effect on crops, also contribute to the price increase.
Looking to the Future: What Do Experts Predict?
Increased costs are expected to be the new normal through this year and likely into early 2022. A New York Times article, which examined global shipping problems and lack of containers, suggests that “containers will remain scarce through the end of this year.” What the COVID outbreak has revealed is the complexity of the supply chain, from containers to the labor force, to product availability. If any of those links in the chain break, then recovery can be slow.
With coronavirus impacting nearly every aspect of food distribution, pricing stabilization will take some time. However, with more vaccines being administered, increasing the labor force, and companies manufacturing more containers and materials, there is light on the horizon.
How Are Restaurant Owners Managing Price Increases?
Some restaurant owners have begun redesigning their menus around more cost-effective meats. Others are choosing to partner with wholesale suppliers that offer all restaurant essentials in one place. Purchasing bulk produce, meat and seafood, industrial restaurant equipment, dry goods, and cleaning products from one location cuts down on shopping time, saving on labor, which can help the overall bottom line. Throughout the industry, restaurant owners understand a strong vendor-restaurant relationship is paramount to profitability and customer satisfaction.
At US Foods CHEF’STORE, we look forward to partnering with the restaurant community to tackle industry challenges together. We have locations across the country that offer exceptional products under one roof, grocery delivery, and professional business services.
CHEF’STORE is Committed to Keeping Products Available at Low Costs
In an effort to continue to provide the highest quality goods and remain in-stock on essential, low-cost items our small business customers rely on, we at CHEF’STORE have taken numerous steps to better tackle these difficult industry disruptions. Below are just a few of the many actions we have taken:
- Sourcing paper goods from local producers like Northwest Napkin in Vancouver, WA allows more flexibility in order to keep our pipeline full.
- To off-set the demand for foam to-go containers, we now offer increased stock of poly, pressed pulp, and paper options from Primeware and GenPak.
- New stock item: Nitrile/vinyl blended gloves from Vitrile.
If you have questions about our products, or how we can help serve you, please feel free to contact us. We look forward to speaking with you!