Does technology have a pivotal role in tackling food inflation?
As consumer budgets continue to be squeezed, do hospitality and foodservice companies need to work harder and smarter to tackle the impact. And what role does technology have?
Food inflation hit a 41-year high of 11.1% in October 2022, according to government figures, and although the latest BRC data has revealed that food inflation decelerated to 11.5% in August (it’s lowest since September 2022) and CGA Prestige Foodservice Price Index fell marginally to 21.7% year-on-year in July., experts are still predicting that consumers will remain cautious with discretionary spend as we head towards Christmas.
Consumer budgets across the country are being continually squeezed by the rapid increases in prices of food and a recent survey by Which? has also revealed that food prices are now as much of a concern for them as energy bills, with nine in 10 respondents reporting they are worried about the cost of food. The knock-on effect for the hospitality and foodservice industry means businesses are having to work much harder and smarter to tackle the impact.
When it comes to navigating rising costs long term, improving processes and increasing bottom line profit, investing in the technological foundations of your business must be a key priority – it is also critical in helping the food industry to deal with growing economic pressures. In fact, a recent survey by IDC, found that: “Digitally mature companies are better prepared for uncertainty and disruptions, including economic shocks.” In response to this research, 78% of UK businesses stated they will be increasing or maintaining their spend on software solutions this year, despite inflation and economic concerns. This highlights the reliance that is now being placed upon technology to lead the way in powering up productivity and profitability during these unpredictable times.
Catering management platforms, like Caternet by Zupa, are making it easier for businesses to reduce waste, control spend, manage stock and inventory, navigate rising costs in the supply chain, and free up time and resource by automating processes that would otherwise be admin-intensive and time consuming for overstretched staff.
Effective cost management is fundamental for the industry right now, but with increased pressure from consumers, it should never be to the detriment of product quality or guest experience, so building robust supplier relationships matters. And this is where the right technology can help. Having access to a wide supplier network in a climate where costs are rising is vital, as is capitalising on procurement technology that supports live pricing to ensure you are getting the best prices.For instance, it might be the case that some higher volume items are available at a discount or are on a long-term price lock, or you may want to consider purchasing from smaller, more local businesses if there is financial benefit. Caternet takes this a step further by allowing you to centralise your agreements with suppliers, thereby increasing transparency and helping you to continuously review against agreed terms so you can make more informed decisions and eliminate surprises with cost and waste.
Talking about the rising cost of food, retail analyst, Ged Futter, recently told Supply Management, “The long-term solution is for retailers to work better, more collaboratively with their suppliers, rather than constantly looking for the lowest price,” he added. “If all you do is look for the lowest price then you’ll never actually get it, because you're not looking at the full supply chain.”
Few businesses will survive and thrive without investing in the right technology to help them navigate the ongoing price hikes and overhaul their operational efficiencies, eliminating challenges such as food waste. As we head towards the autumn months and into the festive season, the food sector will continue to face increased pressure with limited resource. If businesses are to mitigate the potential risks associated with long-term inflation, there will be an even greater pressure to get more granular with cost control, that means identifying every possible way that your business leaks cash. It also means using accurate data to take more meaningful steps around reducing waste and setting clearer strategies around staff resource and supplier collaboration. Ultimately, having the right technology tools in place will help businesses to be better prepared for tackling the impact of food inflation.
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