Cost discipline is the caterer's best friend
With a restaurant sales standstill coinciding with a food standards crackdown, tighter fishing regulations, the sugar tax and adverse growing conditions, caterers are advised to get a handle on their costs over the coming months
The trading challenges that have been reported by a number of high-profile casual dining operators are starting to be reflected across the industry. Hospitality and catering operators will need to add significant discipline to their buying habits if they are to deal with continued consumer caution over the months ahead.
"It's clear that consumers are cutting back on discretionary spending, such as eating out," says Lynx Purchasing managing director Rachel Dobson. "The January figures from the Coffer Peach Business Tracker showed that restaurant sales were flat year-on-year, but this goes beyond the usual new year lull. Since the start of 2018 we've seen a number of well-known eating-out brands announce branch closures, renegotiate rents with their landlords, and cut back on expansion plans.
"Behind the headlines, every operator is dealing with similar challenges: higher costs driven by food and drink prices, staff costs and business rates; and increased competition in terms of both the number of outlets and the latest wave of targeted discount deals and special offers from casual-dining brands."
The warning comes in the spring 2018 edition of the Lynx Purchasing Market Forecast, which offers operators an in-depth look at pricing and product trends over the coming months. Product areas flagged up in the latest Lynx market forecast include the following:
Beef
The demand for beef exports is still strong, and that is likely to push up prices for UK customers over the spring and summer. The high-profile investigation by the Food Standards Agency into a number of leading beef suppliers following the Russell Hume and 2 Sisters Food Group scandals is also causing challenges in the sector.
Because suppliers have become more cautious about using trimmings from primal cuts, the price that caterers have to pay for steaks and joints has risen, as has the price of beef mince to make menu favourites such as pies and burgers.
Lamb
April sees the arrival of new season spring lamb, a popular choice for Easter menus. Prices can be expected to stay firm for around four to six weeks.
Salads
As the demand for salad ingredients increases as we move towards summer, concerns are growing about the Spanish salad crop, which has been affected by low water levels, making irrigation a serious issue for many growers. The availability and price of leafy salads (including Little Gem, Cos and Iceberg), as well as hard salads (including peppers, speciality tomatoes and cucumbers), may be affected before the UK and Dutch seasons get properly under way in late April and May.
Fish
As a response to overfishing by both commercial fishermen and recreational anglers, the Marine Conservation Society has been calling for some time on restaurants to remove sea bass caught in the wild from their menus. To support this, new regulations have been put in place to reduce catches significantly and so help boost the regeneration of stocks. Chefs should consider using high-quality, certified farmed sea bass as an alternative. Native flat fish, such as brill, dabs, Dover sole, megrim and witch flounder (Torbay sole), will also be good value and good quality during spring.
Shellfish
Fresh crab meat prices have recently increased by up to 15%, mainly as a result of increased demand from China. Native king scallops, which are a popular starter across a range of menus, are holding their value as demand outstrips supply, but the imported variety are readily available and represent good value.
Dairy
Dairy prices have eased back from the very high levels that were seen in 2017. However, the price of butter remains highly volatile and is still much higher than it was a year ago. As price fluctuations continue, the impact will be felt on a range of products that use butter as an ingredient (in particular, pastries, cakes and biscuits) and is likely to mean unpredictable prices for caterers into the spring and summer.
Sugar
The sugar tax on soft drinks, which comes into force on 6 April, should come as no surprise to caterers at this stage, but its full impact on prices is not yet clear, as some brands may implement a price increase over and above the tax itself as a way of offsetting higher production costs.
Cooking oils
Soya bean oil has been causing concern on the commodities market as a consequence of dry growing conditions in Argentina and parts of Brazil, which account for nearly half of the world's total soya bean production. Prices seem to have stabilised, but the effect on supplies will need to be monitored. For caterers who sell their used cooking oil for biodiesel production, an influx of biodiesel from Argentina and Indonesia into the UK and EU market has driven the value of used cooking oil sharply downwards since the start of the year.
Wine
The 2017 European grape harvest was the smallest since 1981, which means old world wines will be of good quality but limited supply, so prices will be higher. With southern hemisphere harvests also hit by unpredictable weather, operators will need to take a flexible approach to wine lists if they are to make the most of offers and availability.
Dobson says: "While there are many factors beyond operators' control, we are emphasising the importance of cost control and buying discipline to all our customers. Overall, food prices have been more stable at the start of 2018 than they were throughout last year, so there is an opportunity for operators to seize the initiative and take control of their purchasing. Those who do so will put themselves in the strongest position as the competition for customers intensifies.
"Alongside the latest market forecast, our insight guide, The Seven Habits of Highly Effective Purchasing Teams, details seven proven ways that operators can make simple improvements to their purchasing, generating substantial savings that can mean the difference between staying profitable or going under in this challenging market."
About Lynx Purchasing Lynx Purchasing works with more than 2,200 customers in the hospitality and catering sector on a no-membership and no-contract basis that offers like-for-like products at lower prices and often better quality than operators could obtain by negotiating alone.
As purchasing professionals, Lynx works with leading suppliers in the hospitality and catering industry. These include wholesalers, specialist fresh food suppliers, catering equipment providers, utilities and specialist service providers such as telecom, business rates consultancy and waste management.
A free Lynx Purchasing guide, The Seven Habits of Highly Effective Purchasing Teams, can be downloaded from the website www.lynxpurchasing.co.uk. Keep up to date with Lynx Purchasing via Tweets by lynxpurchasing and Facebook. For more information, call 01325 377845 or email savings@lynxpurchasing.co.uk.
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