Salad days are over: ‘Lunchflation’ figures show big price hikes for UK restaurants

Data from software company Square reveals a growing trend of inflated lunch items across UK hospitality.

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Research has highlighted the surge in product prices amongst hospitality businesses, as the cost of living crisis hits new heights for SMEs.

The data from digital payments and tools provider, Square indicates that cafes and restaurants in the UK have introduced notable price hikes over the last year.

Some food items, such as soups and salads, have increased by as much as 36% and 34% respectively.

The consumer price index (CPI) inflation soared to 9% in April as a result of rising gas and electricity prices. This is the CPI’s highest level for more than 40 years, and has led to a surge in prices across the UK supply chain.

Olga Sipcenoka is founder of Per Tutti, a family-run and award winning Italian Restaurant based in Hertfordshire. Sipcenoka comments: “As a family-run business, we can definitely feel the impact of skyrocketing inflation on our performance and bottom line.

“Suppliers call every week with new price increases, which is worrying and stressful in equal measure.”

Cheap as chips?

The Square data has further broken down the new trend of “lunchflation”. The results reveal a significantly higher increase amongst food items than the UK’s current rate of inflation.

Here are some of the lunchtime items that have soared in price year-on-year as of March 1st 2022:

 SoupsSaladsBurgersWrapsSandwiches
Lunchflation rate:36%34%28%21%20%

Food for thought

Much has been said about the return of office workers in the UK, following almost two years of work-from-home policies during the COVID-19 pandemic.

Square’s figures raise many questions as to how this will affect the hospitality sector in the long-run.

Many will likely be forced to pass on rising costs to consumers at a time when trading is still returning to normal.

Sipcenoka is fighting hard to avoid putting up costs for Per Tutti’s customers:

“We have not increased our prices as we have to be in line with our local competitors including some very big chains, but how long will we be able to swallow the extra cost without passing it onto the customer?

“Profits are shrinking at the same time as the cost of living is increasing, including petrol and supermarket shopping. We are a family of five and it’s really worrying.”

As well as contending with rising transportation and supply chain costs, the hospitality sector is also facing a labour shortage.

The latest government figures show that the number of vacancies in the hospitality industry between February and April 2022 was 171,000. That’s an increase of 296% year-on-year.

In a press release, Kaushalya Somasundaram, Head of UK Payments Partnerships and Industry Relations at Square, said: “The increased price of lunch is due to the rising costs faced by restaurants, who’ve seen everything from staff salaries to ingredients become more expensive.”

For alternate ways to save money in your business without raising prices, read our guide on how to budget in the current cost of living crisis.

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Helena Young
Helena Young Senior Writer

Helena "Len" Young is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has also previously written for a popular fintech startup.

Included in her topics of interest and expertise are tax legislation, the levelling up agenda, and organisational software including CRM and project management systems. As well as this, she is a big fan of the films of Peter Jackson.

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