Extreme weather forced hospitality businesses to hike prices in June

Food and drink prices rose by 1.8% across the hospitality sector in June, as a heady mix of supply issues, unpredictable weather, and structural concerns bear down on UK supply chains, new data finds. 

Price rises were recorded among nearly every food and service category, but were the starkest for white fish and seafood produce, driven by strict quota restrictions across North Atlantic whitefish fisheries. 

While warmer weather can benefit hospitality businesses by boosting impulse buying, these supply chain issues add to a growing stack of cost pressures for venues this summer, with June’s price jump coming on the heels of April’s hike in employer National Insurance contributions and ongoing increases to business rates.

Hospitality prices rise 1.8% in June as UK supply chains buckle under pressure

As temperatures continue to climb, so does the list of pressures squeezing hospitality businesses this summer. 

Despite a modest easing of prices in May, the latest Foodservice Price Index from NIQ and Prestige Purchasing has revealed that unpredictable weather and global events have seen costs rise month-on-month for nearly every food and beverage category in June. 

Fish and seafood saw the steepest climb, as a combination of fishing restrictions in the North Atlantic and persistent biological challenges constraining farmed salmon output drove costs higher.

The meat and poultry sector was also impacted, as strong global demand and tight cattle availability pushed up prices, while the coffee, tea, and cocoa category witnessed similar price hikes due to adverse weather and structural plantation issues in Brazil, Vietnam, and West Africa.

Closer to home, vegetable and dairy products recorded significant month-on-month increases in June, as extreme European heatwaves put pressure on weather-intensive crops and reduced milk yields further tightened supply.

Commenting on the findings, Reuben Pullan, senior insight consultant at NIQ, said: “The upward movement in virtually all food and beverage items adds yet more weight to the burden of costs carried by businesses across the supply chain and will further reduce the confidence of businesses and consumers alike.”

For an industry still recovering from a turbulent few years, this summer’s supply chain squeeze looks set to test resilience further – but could Burnham’s new Prime Ministership offer struggling businesses a way forward?

Could a new Prime Minister ease cost pressures?

Just a week into his new role as Prime Minister, Andy Burnham has already hit the ground running by unveiling a 20% cut to business rates for pubs, clubs, and live music venues across England. 

The relief is part of a wider £100 million package aimed at protecting high streets and easing cost of living pressures for both businesses and consumers.

Due to come into effect from April 2027, the discount is expected to benefit nearly 32,000 venues, and save the typical pub around £1,100 a year. For an industry that’s faced relentless cost pressures in recent years, this will come as welcome news. 

The move has been praised by trade bodies, with The Night Time Industries Association describing it as a much-needed relief for businesses trying to stay afloat. 

However, the relief isn’t extended across the whole of hospitality. Restaurants and hotels have notably been left out of the cut, despite facing similarly steep rises in food and produce costs, prompting criticism that the policy favours some parts of the sector over others.

While Burnham’s rates cut may offer a lifeline to pubs and clubs, it does little to ease the pressure on the wider hospitality industry – suggesting that venue owners may also have to take matters into their own hands to protect their margins.

What can hospitality operators do to weather the storm?

With prices unlikely to significantly ease in the short term, operators may be forced to look inwards to shore up their bottom line before passing the buck onto customers. 

Reviewing supplier contracts and diversifying sourcing is a practical way to mitigate supply chain issues. 

Alternatively, leaning on ingredients less affected by current pressures offered another way to reduce costs without compromising on quality. 

Energy procurement is another area ripe for scrutiny. Speaking on the findings, Pullan urged operators to take a longer-term view: “Operators must look beyond headline energy prices and focus their procurement strategies on mitigating climate and structural risks, which will undoubtedly dictate market pricing as we move through the second half of the year.”

Passing costs on to customers may ultimately prove unavoidable for some. But with consumer confidence already fragile, operators who exhaust other options first will be best placed to protect both their margins and their footfall.