Understanding inflation and its impact on the hospitality industry in 2023
Emily May Kong
19th January 2023
Business in the hospitality industry can be unpredictable. Rising inflation rates are one of the many variables that can drastically change how you run your business. It’s important to stay informed about inflation rates and consider a range of scenarios so you can make sure your business is prepared for any changes that come your way. Let’s take a closer look at what inflation is, why it matters to the hospitality industry, and what we can expect in 2023.
What is inflation?
Inflation is a measure of how much prices have risen over time. It’s calculated by taking the average price of goods and services from one year and comparing it to the average price from another year. The resulting percentage reflects how much prices have gone up or down since then.
Why does inflation matter for the hospitality industry?
Inflation has a direct impact on food, beverage, and labour costs for businesses in the hospitality industry. With higher food costs, commodities, wage costs and labour shortages, restaurants need to decide whether they will absorb those costs into their operating budget or pass them on to their customers in the form of higher menu prices. Either way, rising inflation can affect profitability if not managed properly. FoodByUs offers a range of tools to help you keep on top of your cash flow.
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Rising inflation rates have had a noticeable effect on the hospitality industry in 2022, and this is expected to go on throughout 2023. Food and labour costs may continue to go up, so it’s important for businesses in the hospitality sector to plan ahead and budget accordingly. Additionally, businesses should consider ways to offset these costs through more efficient operations or through pricing strategies. Managing food costs using a wholesale ordering system such as FoodByUs can help effectively allow them to remain profitable while still providing value to their customers. Restaurants can search & compare prices from hundreds of suppliers and get data for their spending across over 14 categories.
Inflation is an ever-present force that affects businesses across all sectors—including those in the hospitality industry. While there may be some uncertainty ahead as we head into 2023, businesses can prepare for rising prices by staying informed about current trends and planning ahead with effective budgeting strategies. By doing so, they will be able to ensure their continued success despite any potential economic headwinds that may arise over the coming months and years.