Entegra’s Cost Outlook: Navigating Inflation and Supply Chain Challenges

When planning out your hospitality procurement, do you include analyzing macroeconomic trends that could impact what you’re paying for food and supplies? You should be. Entegra makes it easier to understand, analyze and act on the news so you can make informed decisions in your business.

The inflation equation for hospitality

Prices rose 3 percent in June compared with the year before, and 0.2 percent compared with May, the smallest 12-month increase since March 2021. While this is relatively good news for operators, decreasing their costs and putting less pressure on their margins, the trends that shape inflation may still be flashing warning signs.

Those trends include:

1. The War in Ukraine. Ukraine is traditionally a key exporter of wheat, corn and sun oil to the world, and thus the risks of supply disruptions drove sharply higher by May 2022. More recently, Russia withdrew from the deal to allow Ukraine to export grain, potentially stressing the global food supply and impacting prices. This is a fluid situation that continues to play out, bringing uncertainty in terms of pricing and availability of world grain supplies and pricing.
2. Energy costs. Changes in energy costs have a dramatic impact on commodity markets, as well as the health of the US economy. The U.S. consumer spends nearly $500 million annually on gasoline, and thus the price of gasoline can have a dramatic impact on consumer spending.
3. Labor costs. Due primarily to demographic trends, availability of labor in the U.S. and worldwide is going to be a challenge that will persist for the foreseeable future. Despite rising wages, the ability to track and retain employees will be a key challenge confronting businesses in the years ahead.
4. The U.S. dollar. Over the past two years, the value of the U.S. dollar (relative to other currencies) has gained roughly 12% in value — a trend that should generally lead to downward pressure (or less upward pressure) on most commodity prices.

Entegra's Cost Outlook provides valuable information on inflation, commodity forecasts and price trends, assisting hospitality-driven businesses in managing costs and making informed decisions. It emphasizes the need for adaptability and adjustment to impact your bottom line effectively.

As businesses navigate inflation and supply chain challenges, Entegra remains a trusted partner, dedicated to supporting and guiding you in achieving your goals.

Get the complete picture from the Entegra Cost Report.

July 26, 2023