Hospitality leaders have raised menu prices by an average of 9% and plan to raise them by another 6% in the next 12 months to cover mounting costs, according to the latest Business Confidence Survey by CGA and Fourth.

The survey – with respondents representing a total of 8,500 sites – shows some price rises are being passed on to consumers to cover the rise in energy, food and drink supplies, and labour costs.

Seventy-one percent of industry leaders have seen significant increases in energy costs, while 60% have experienced significant food and drink price inflation. Eight in 10 have experienced reduced product lines.

Sustainability remains a key priority, with half of business leaders planning to reduce their carbon footprints by introducing measures including the addition of plant-based menu items, switching to renewable energy sources, reducing energy use, consolidating deliveries, working with greener suppliers, and reducing waste.

Sebastien Sepierre, managing director – EMEA, Fourth, said: “The hospitality industry has had a torrid time over the last two and a half years, and the ongoing supply chain disruption is the latest challenge that businesses have had to contend with.

“Recent data published by Fourth indicates that average overall costs are up 10% on 2019, and that the average gross profit margin has fallen from 78% to 74% in the last 12 months.

“Leaning on the support of technology and smart solutions is one of the primary ways sector businesses can manage this ongoing crisis. Whether it’s directly comparing suppliers and costs, replenishing inventories, adjusting ingredients in menu items, or simply uncovering what you need and when – smart tech can ease what is continuing to be an extremely tough time for our industry.”

Karl Chessell, CGA’s business unit director - hospitality operators and food, EMEA, said: “The double whammy of cost and availability issues is piling huge pressure on operators’ margins. Combined with the growing cost-of-living crisis for consumers, it means trading conditions will be very tough over the remainder of 2022.

“Hospitality’s long-term future is bright, but for now leaders will have to find the right balance between absorbing soaring costs and passing them on to guests. The huge supply challenges also highlight the need for urgent and sustained government support for the sector.”