fine food news High footfall but low profit margin is a ‘recipe for disaster’, warns Chandos boss
Delis urged to hold margins as food inflation tops 5% By PATRICK McGUIGAN
Leading retailers have warned that delis and farm shop owners who do not maintain control of margins as inflation bites are putting their businesses at risk. Latest figures from the Office of National Statistics show food inflation is currently running at 5.3%, well above the general rate of inflation of 4.5%, due to huge leaps in commodity prices such as wheat, sugar, cocoa and coffee, as well as increases in packaging and fuel costs. Fish, oils and sugar-based products, such as jam and confectionery, showed the biggest price increases, up 11%, 20% and 7.5%, respectively compared to a year before. Cocoa prices have risen 22% in two years. “There seems to be a price rise almost every day now and we’ve had to put some Iain Keith Smith: ‘We’re paying the same rent and rates as fashion retailers who make 60-80% margins’ of our prices up 10% after holding out for over a year,” said Iain Keith Smith, who At Country Food & Dining, which runs four farm shops owns West Country deli chain Chandos. in the south of England, operations director Tom Newey “Not paying close attention to margins is hugely added: “If people think it’s a simple case of passing on dangerous. It’s easy to say, ‘It’s only an extra 50p per price increases as a matter of course, then they will face kilo, we can absorb that,’ but lots of customers but no problems in these rough economic times. We have to margin is a recipe for bankruptcy. We’re paying the same weigh up each price increase as they come. It’s crucial we rates and rents as fashion retailers who make margins of compete with the larger retailers on core basket items, 60-80% and restaurant chains making over 80%, so you such as milk and bread, and this year we have decided to have to be brave.” take a small hit on some margins.” Dan Mortimer of London deli Mortimer & Bennett Newey predicts further inflationary pressures ahead. backed up the advice. “We monitor prices on a weekly “I suspect we are in for more significant rises right across basis. I’ve become almost paranoid about it. You have to the board – I would certainly not like to be entering the be so careful. Increases can sneak up on you and before market with a new food product this year.” you know it you’ve taken a big hit to your bottom line. At the Suffolk Food Hall, director Oliver Paul warned It’s where you can go under if you’re not careful.” that he would expect suppliers to drop prices when Putting up prices is not easy, however, with all the commodity increases eased. “Although secondary retailers contacted by FFD admitting they had taken a hit producers always put up prices when raw materials rise, on margins in the past year. “There’s no doubt margins we never see a corresponding drop when they fall. This are being squeezed,” said James Dart of Darts Farm in time around if commodity prices do fall I think we will Devon. “We try to introduce increases as and when we see even independents demanding this be reflected in the receive them, but we have to be careful because we are cost of products.” already at the premium end of the market.”
HOW top retailers TACKLE food inflation “We’ve increased the range of products that are prepared on-site and therefore command a healthy margin. They go a long way to offsetting any hit we might have ‘accepted’ in other parts of the business.” Tom Newey, Country Food & Dining 4
July 2011 · Vol.12 Issue 6
“The Suffolk Food Hall takes each price increase on a case by case basis, weighing up whether the customer will notice the price change if we maintain our margin. In some cases we decide the supplier has priced itself out of the market and will source new artisan
products which can be produced with a lower cost base.” Oliver Paul, Suffolk Food Hall “We aim for higher margins on fresh products like cheese and charcuterie which require a lot of handling compared to, say, a pot of jam that just sits on the shelf.” James Dart, Darts Farm
Masterchef joins Great Taste jury Last year’s Masterchef winner Drhuv Baker joined celebrity chefs Antonio Carluccio and Sophie Michell, restaurant critic Charles Campion and 11 other writers, chefs and retailers for the 2011 Great Taste Awards final judging in London last month. The Supreme Jury met at Olympia’s Pillar Hall after a morning judging session saw 75 experts re-evaluate this year’s 114 three-star gold winners to produce a shortlist of just 18. Compered by BBC Radio 2’s Nigel Barden, the final judging was captured on video to be shown during the Great Taste Awards presentation dinner at London’s Royal Garden Hotel on September 5, when the regional, and national awards winners will be named along with the 2011 Supreme Champion. This year has seen a record 7,484 awards entries judged by 350 experts during 32 days of blind tasting. All results – apart from the major trophy winners – will be available from the Guild of Fine Food from the middle of this month, along with judges’ feedback.
Deli of the Year line-up revealed Sponsor and organiser Olives Et Al announced the regional winners in the second Deli of the Year competition as FFD went to press, after a first-round judging session at Fortnum & Mason. The 11 stores are all now contenders for the national Deli of the Year title, to be announced at the Great Taste Awards dinner in London on September 5. The regional winners are: Arcadia, Belfast (Northern Ireland), Provender Brown, Perth (Scotland), Leon’s Deli, Presteigne (Wales), The Monkey Tree, Wigton (North West), Haley & Clifford, Leeds (North East), Brown & Green, Trentham (West Midlands), Limoncello Delicatessen, Cambridge (East Midlands), Arch House Deli, Bristol (South West), Jacobs & Field, Oxford (South East), The Deli Downstairs, London (joint regional winner), El’s Kitchen, London (joint regional winner). Over 400 delis were nominated this year, with 120 going forward for first-round judging. Finalists will now be visited and scored by mystery shoppers before the overall winner is announced.