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"Lettuce is 7 yuan a pound, and if you buy a few vegetables, it starts at 30 yuan."

"It was more than 3 yuan last month, but now it is 7 yuan. The price of cucumbers has doubled."

"Pork prices have also risen ridiculously. Tenderloin is 30 yuan per pound. I really can't afford it."

Recently, the prices of various food ingredients have skyrocketed. According to data released by the Ministry of Agriculture and Rural Affairs, the average price of 28 key monitored vegetables, such as cucumbers, spinach, and green onions, has risen for six consecutive weeks. For example, the price of cucumbers has risen by 154.6% in the past two months. The price of pork has risen by more than 30%, and the price of eggs has risen by more than 20%.

Faced with the skyrocketing prices of various ingredients, consumers can still hesitate to buy or not, but catering businesses have no choice. A large number of catering businesses are bearing the pressure of rising ingredient costs, hoping that vegetable and meat prices can come down soon.

1. The price of food ingredients has increased, and the prices of vegetables, pork and eggs have soared

Let’s first take a look at how drastic the increase in vegetable prices is this time.

National wholesale price data for 28 kinds of vegetables that are key monitored by the Ministry of Agriculture and Rural Affairs showed that from June 16 to August 15, the national daily price of vegetables rose from 4.27 yuan/kg to 6.01 yuan/kg, an increase of 40.7%.

Among them, the market wholesale price of cucumbers increased from 2.56 yuan/kg on June 19 to 6.52 yuan/kg on August 19, an increase of 154.6%; during the same period, the market wholesale price of green onions increased from 2.79 yuan/kg to 6.09 yuan/kg, an increase of 118.2%; and the market wholesale price of spinach increased from 4.84 yuan/kg to 9.47 yuan/kg, an increase of 95.6%.

In reality, we can see that in the past two months, vegetable prices have skyrocketed across the country.

In Guangzhou, Xiao Re (pseudonym), who often goes to the supermarket to buy vegetables, complained to Hongcan.com: "Cucumbers, broccoli, and Chinese cabbage are almost unaffordable. About a month ago, cucumbers were only 1.98 yuan per catty, but now they are 6.98 yuan per catty. The price of broccoli has also increased from 3 yuan to 6.5 yuan."

△Photo source: Hongcan.com

A stall owner at a farmer's market in Guangzhou also told Red Can.com that because the purchase price has risen, they have no choice but to raise the price as well. Especially leafy vegetables, which are not easy to store, vendors can only sell them at high prices. Red Can.com noticed that at this stall, Chinese cabbage has been sold for 6 yuan per catty.

In Beijing, according to CCTV News, in August, the weighted average price of vegetables in Beijing Xinfadi Market, the largest agricultural product wholesale market in Beijing, was 4 yuan per kilogram, up 25% from the same period last year.

Data from the Sichuan Provincial Development and Reform Commission and the Provincial Bureau of Statistics show that since July this year, vegetable prices have been rising rapidly. Among the 28 common vegetables in Sichuan, 14 have seen a significant increase in farmgate prices. Among them, mustard greens, cucumbers, eggplants, green onions, lotus roots, etc. have increased by more than 50%.

In addition to vegetables, the prices of ingredients such as pork and eggs are also rising.

Data from the Ministry of Agriculture and Rural Affairs show that the wholesale price of pork has been rising since March this year. As of August 19, the wholesale price of pork has risen to a high of 27.46 yuan/kg, compared with 20.18 yuan/kg in March, and the increase in pork prices this year has exceeded 30%.

During the same period, the price of eggs also rose. As of August 19, the wholesale price of eggs had reached 10.61 yuan/kg, while the wholesale price in March was 8.56 yuan/kg, an increase of 23.9%.

Why are the prices of vegetables, chicken, eggs and other food materials rising? It is mainly due to the tightening supply.

Zhang Jing, an associate researcher at the Institute of Agricultural Information of the Chinese Academy of Agricultural Sciences, said in an interview with CCTV News that July and August are the "summer off-season" for vegetable production and supply. In early July this year, Hunan, Shandong, Anhui, Sichuan and other provinces suffered convective weather such as heavy rains and thunderstorms, and some areas also experienced floods, which affected local vegetable production, harvesting and transportation.

The "China Catering Supply Chain Monthly Report (August 2024)" issued by the Red Catering Industry Research Institute also mentioned that the price increase of pork and other ingredients is mainly due to the reduction in supply and the increase in demand. Due to the significant impact of extreme weather (such as heavy rains, floods, typhoons and geological disasters) across the country this year, the breeding industry has been affected by the reduction in supply, and consumers' advance and excessive purchases have also led to price increases.

It is worth mentioning that many agricultural experts have analyzed that it is expected that the price of home-cooked dishes will return to "home-cooked" prices after mid-September. And the price of pork may remain relatively high until September.

2. The restaurant industry has a hard time saying, “Raising prices offends customers, and not raising prices means no profit.”

As the prices of vegetables, pork and eggs continue to rise, people in the catering industry across the country have been feeling the pain.

As we all know, the catering industry is a cash flow industry, and employee salaries, rent, and food purchases are all fixed expenses. While rent and labor can still be negotiated and maneuvered, the price increase of ingredients makes catering people powerless to resist.

Many industry insiders said that even if vegetable prices rise and cost pressure increases sharply, most catering people can only choose to bear the pressure of rising raw material costs, and there is basically no price increase.

The reasons why everyone is afraid to raise prices are similar. Consumers are becoming more and more sensitive to prices. Even if a restaurant slightly increases prices or reduces portions, it may cause customer dissatisfaction or even resistance. It can be said that "if you raise prices, you will offend customers, and if you don't, you won't make any profit."

At the popular Beijing restaurant specializing in "Eighteen Dishes" - Shifu Shuo, the store manager Li Duo said that the store's profits have declined significantly recently.

As he said, the store’s products are mainly fresh, and all vegetables and other ingredients are purchased on the same day, so they are also more sensitive to price changes. “In July, the price of the vegetables we purchased was basically about 25% higher than before.”

The rise in vegetable prices will directly affect the store's profits, but the chef said that there will be no price increase. "Our store is positioned to focus on cost-effectiveness, so we will definitely not raise prices just because of the rise in raw material prices."

△Picture source: Provided by the interviewee

Fortunately, the customer flow that the master mentioned is still good.

However, for a large number of mom-and-pop shops and small stores, it is now difficult.

"I dare not buy many vegetables these days. When customers come to eat, they order this dish but it's not available, and that dish they order is not available." Yang Aqiao, who opened a fast food restaurant in Shenzhen, admitted that vegetable prices in Shenzhen have doubled in recent times and the restaurant is almost unsustainable.

Yang Aqiao's fast food restaurant is located in a village in the city. The lunch boxes sold in the store are priced at about 13 to 15 yuan, and the customer flow is usually limited. "Now in Shenzhen, cucumbers cost 6 yuan per pound, green beans cost 8.8 yuan per pound, and snow peas cost 9.8 yuan per pound. Vegetables are so expensive that even if you work hard to buy them, you can only sell them for a dozen yuan, which means you are losing money."

Under such circumstances, Yang Aqiao still dares not raise prices easily. "Our fast food is freshly cooked, and the price has not increased in the past few years. If it is too expensive, people can't afford it. Now I just want the food to be reduced to normal prices, so that the fast food restaurant can survive."

Yang Aqiao is not the only one who dares not raise prices.

The owner of Hangzhou Yihang Restaurant complained that the prices of vegetables in Hangzhou have skyrocketed recently, and both meat and vegetables have reached the "Chinese New Year price", but the store still has to maintain the original price of its products. "If the price goes up, I will offend the customers, but if I don't, I won't make any profit. I feel helpless."

Vincent, who runs "CowCow Qiqi Beef Offal Coffee Company" in Guangzhou Liuyun Community, also told Hongcan.com that since late June, the prices of green leafy vegetables that are not easy to store, such as Chinese cabbage, tomatoes, and lettuce, have risen significantly, and the price of pork has also increased from 8 yuan per catty at the beginning of the year to 14 yuan per catty now.

In July, the cost of raw materials for the several stores he opened increased by about 20%, and profits were significantly reduced. "Prices have soared. The 33.8 yuan hot pot for two and the 9.9 yuan rice bowl in the store are all at a loss."

Considering that the overall environment is too competitive, any price adjustment may affect the flow of customers into the store, so Vincent did not raise the prices of store products. However, he also said that whether the current low prices can be maintained in the future is still a question. After all, the profit is getting worse and worse. If no changes are made, there will really be no profit in the future.

3. How should catering companies respond before being "crushed" by food costs?

At present, in the short term, the prices of ingredients such as vegetables, pork and chicken may not fall to their previous levels.

However, in today's fiercely competitive market environment, if the increased costs cannot be absorbed reasonably, it is conceivable that a group of small-scale, weak-potential single stores or husband-and-wife stores will face difficult survival issues. So, how can they survive in the cracks before being "crushed" by the mountain of food costs?

Some people in the catering industry have already started to take action and are taking some measures to mitigate the impact of rising food prices on restaurants.

Vincent introduced that CowCow stores increased store profits by adding high-gross-margin snack products and reducing the impact of rising prices of individual ingredients.

△Photo source: Hongcan.com

Hongcan.com also noticed that when faced with price increases for ingredients, many restaurants will choose other ingredients with more price advantages to develop new products and add auxiliary products. After all, consumers are more sensitive to price increases for existing dishes, but they are more receptive to the pricing of new dishes.

Just like this round of vegetable price increases, leafy vegetables will see a more significant price increase, but the prices of vegetables such as potatoes and onions have not fluctuated significantly. Therefore, some fast food restaurants have reduced leafy vegetable products and recommended other products instead.

In this way, while ensuring store profits, the overall consumer experience is also guaranteed.

Li Duo's adjustment logic is different. In his view, the price increase of food ingredients is a phased one, and ups and downs are normal, which should not bring about major changes to the overall operation and pricing system.

Just like what the master said, the product structure itself is relatively fixed, so the store mainly uses some marketing methods to balance the problem of rising costs. "Our store is carrying out activities such as membership recharge and free meals to increase the rate of new customers entering the store and the frequency of repurchase by old customers, so as to offset the problem of rising costs and compressed profits."

In addition to refined operations and adjustments to product dimensions, the supply chain can also help catering people resist the risks and pressures brought about by fluctuations in food prices.

From this round of vegetable price hikes, we can also see that compared with small restaurants and self-employed individuals, medium and large chain restaurants have not been affected much by this round of vegetable price hikes. These restaurant companies all have one thing in common: they either have their own supply chain system or have mature and stable upstream supply channels.

This is actually a reminder to catering businesses that the catering industry has entered an era of stock competition. In the future, only by improving the company's risk resistance in multiple dimensions can it better cope with changes in the external environment.