Wagamama and Upper Crust restaurant firms warn of worsening inflation
The owners of restaurant chains Wagamama and Upper Crust have warned inflation would worsen this year as the war in Ukraine exacerbates a rise in food, commodity and energy prices.
The warnings come as households face a major cost-of-living squeeze from the highest inflation in decades and restaurant operators attempt to recover from the havoc wreaked by the pandemic.
The UK-based Restaurant Group, operator of Asian food chain Wagamama and Italian-American-themed Frankie & Benny’s restaurants, projected food and drink inflation to reach 9% to 10% this year, compared with a 5% estimate given in March.
SSP Group, which runs the Upper Crust brand of sandwich shops along commuter routes, said it expected inflation to “step up” through the second half and into next year.
“Where there is low labour availability, this is also resulting in higher labour costs,” SSP said in a statement. Patrick Coveney, the former CEO at food firm Greencore, has taken up the top job at SSP this year.
The Ukraine crisis and global supply chain disruptions that began during the pandemic have spurred price increases worldwide, making everything from fuel to food more expensive.
Both SSP and Restaurant Group are taking steps to protect their business from inflation. SSP said it was promoting more profitable menu items, while Restaurant Group said it was working with its supply chain partners to mitigate the impact.
Still, Restaurant Group posted stronger like-for-like sales across its Wagamama and pub locations for the year-to-date period as more diners visited restaurants than a year earlier.
SSP, which is listed on the Ftse-250 index, reported a much smaller half-yearly loss and said it expected sales to near pre-pandemic levels, as people travel more and return to offices. The group said the loss before tax came in at £2.3m (€2.7m) for the six months to the end of March.
Meanwhile, UK grocery price inflation reached 7%, its highest level since May 2009, according to market researcher Kantar. Its latest survey also found over a fifth of UK households said they were “struggling” to pay their household bills and most UK households are worried about the cost of grocery shopping.
“People are really feeling the squeeze at the supermarket tills and they’re having to stretch their budgets further to accommodate rising prices,” said Fraser McKevitt, who is head of retail at Kantar.