Last updated on June 15th, 2023
If you work in food service, you’ve probably thought that food seems a little more expensive lately, and you’re right. According to the USDA’s Food Price Outlook for 2021, grocery store/supermarket food purchases prices have increased 1.4 percent and restaurant prices have increased 2.5 percent over 2020 costs, and they aren’t stopping there. In 2021, grocery store prices are still expected to increase between 2 and 3 percent, and restaurant prices are expected to increase between 3 and 4 percent.
Why is this happening? Well, you probably guessed that the COVID-19 pandemic has something to do with it. The driving forces behind these cost increases are simply supply and demand. 2020 was a year of labor shortages, factory shutdowns, and supply chain disruptions. Rising raw materials and transportation costs also feed the problem. The food industry can’t just bounce back from that overnight. It will take some time for consumer goods’ costs to stabilize.
What foods are seeing the highest price increase?
One of the primary reasons we’re seeing higher food costs is that it’s costing a lot more to produce foods. The USDA tracks the prices of several food categories and found that in 2021, no categories had lower prices than in 2020. Fresh fruits saw the most significant increase at 4.8 percent, and vegetables saw the smallest increase at .3 percent. Among fruits, citrus has seen the largest increase from 2020 to 2021 due to the low production of oranges in Florida, lemon and navel oranges in California, and grapefruits in Texas. Fresh fruit prices are predicted to increase between 4 and 5 percent in 2021.
Meats are also seeing significant increases due to high feed costs and strong global and domestic demand. Animals are typically fed plant-based diets of corn, grain, and soybeans, and all of those elements have seen price increases in the past year. Corn prices have doubled, wheat is up about 30 percent, and soybean prices are up 80 percent due to increased demand.
Weather events, like winter storms and droughts, disrupted beef supply in the past year, and the high prices for sows lowered pork production. The USDA states that because of all these factors, wholesale beef prices may increase between 10 and 13 percent, wholesale pork prices may rise between 14 and 17 percent, and wholesale poultry prices may rise between 15 and 18 percent this year.
The food companies are feeling it too
During the past year, many large food corporations have told customers that their prices will be increasing. Major players like Coca-Cola, Nestle, Mondelez International, and Hormel have announced price increases to offset rising expenses related to packaging and transportation costs. The cost of aluminum, for instance, is up 17 percent from 2020, affecting the cost of canned goods. Gasoline costs have increased 74 percent from the spring of 2020 when a gallon of regular gas was just $1.77/gallon. The national average in June of 2021 was $3.09/gallon.
How can your community keep food costs low?
If you manage a senior living community or hospital, these rising costs may seem daunting. You and your team need to determine how you’ll continue to provide high-quality meals to patients and residents while staying in budget.
If this seems like too big of a challenge, it may be time to consider outsourcing. Outsourcing can help you manage your food costs and ensure your supply chain isn’t disrupted. Even during uncertain times (like a global pandemic and its aftermath), you’ll be certain that residents and patients continue to receive nutritious, healthy meals.
Culinary Services Group works hard to keep our costs low so we can pass the savings on to the communities we work with. We source the best ingredients at low prices through our partnership with US Foods and Premier Inc., two group purchasing organizations. These partnerships also enable us to source the products your community needs from producers and distributors in your local area.
Our communities see an average of $98,000 in raw food savings and $43,000 in net cost savings when outsourcing their dining programs to us. This is because when communities work with a food service management company like Culinary Services Group, they benefit from our purchasing volume which allows us to negotiate lower market rates. On average we save nearly a half-million dollars on food costs every quarter thanks to our partnerships.
While you may have heard about other companies facing late truck deliveries and food shortages, Culinary Services Group’s service level remained consistently high, with 99 percent of our food orders being received on-time and correct (even in the height of the pandemic!).
While outsourcing may sound like an extra expense you can’t take on with rising food costs, a partnership with a company like Culinary Services Group can actually help you beat these prices and ensure a stable supply chain. Rising food costs don’t need to be a cause for concern with the right food service partner.
Are you interested in learning more about working with Culinary Services Group and saving money on food costs? Contact us here.
