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Insight of the Day: Food inflation might have fallen but will the cost of eating out ever go down?

Key Points:

  • Food Inflation: While food inflation has fallen, it doesn't mean prices are going down. They're just increasing at a slower rate.

  • Restaurant Inflation: Food inflation in the hospitality industry is still significantly higher than in retail.

  • Brexit Impact: Brexit is a major factor driving up the cost of eating out, impacting staffing, imports, and overall business operations.

  • Staffing Issues: Difficulty finding and retaining staff is a primary concern for restaurants, contributing to higher costs.

  • Other Factors: High business rates, taxes, and the cost of living crisis also contribute to rising costs.

  • Consumer Behavior: Diners are spending less on average but still frequenting restaurants, often choosing more affordable options.

  • Independent Restaurants: Independent restaurants face additional challenges compared to large chains and franchises, including difficulties securing loans and dealing with high rents.

Additional Insights:

  • Menu Pricing Strategies: Restaurants like Fallow are adjusting their menu prices to balance costs and offer more affordable options.

  • Paying a Living Wage: Some restaurants, like Mercato Metropolitano, prioritize paying their staff a living wage, even if it means sacrificing profits.

  • Lack of Government Support: The lack of government intervention, such as VAT cuts or business rate reductions, is further exacerbating the challenges faced by the restaurant industry.

  • Political Concerns: Some experts worry that the focus on fast food chains over independent restaurants could have negative public health implications.

  • Future Outlook: While some restaurateurs are optimistic about eventual price stabilization, others are calling for significant policy changes to address the root causes of rising costs.

Overall, the article paints a complex picture of the factors contributing to the high cost of eating out. While food inflation plays a role, it's not the only issue, and a combination of Brexit, staffing shortages, rising costs, and government policies are all contributing to the problem.


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