Despite Increasing Profits Food Companies Plan To Raise Prices In 2023

Peruse the aisles of your local grocery store and you're sure to have at least a tad of sticker shock these days. Who would have dreamed a couple of sunny side-ups would set you back more than your morning latte, for example? While the USDA reports factors such as avian influenza and holiday baking are the likely culprits to blame, the 149% spike in egg prices compared to last year just doesn't seem to sit well for most consumers.

As the annual U.S. inflation rate apparently pumps its brakes ever so slightly, from 7.7% to 7.1% over the past month according to Trade Economics, the cost of food rose 11.2%, with grocery prices up 12.4% and restaurant prices up 8.6% year-over-year, per a new report by Food Business News. The outlet cites many reasons why more than two-thirds of its respondents are optimistic about the rising cost of doing business with 2022 almost in their rearview. Louis Biscotti, national leader of Marcum's food and beverage group told Food Business News, "Honestly, this was a bit surprising to me considering the many challenges facing the industry." Even as the report states increases in revenue, 57% of its subjects plan to continue raising prices in 2023. If you're scratching your head over this math, you're not alone.

The cost of doing business

The good news from the Food Business News report is that 62% of food and beverage professionals plan to lower costs for consumers in 2023. Renegotiating with suppliers and limiting the inventory of certain items are a couple of ways the report suggested to address inflation. Still, among the priorities reported were both cutting and raising costs depending on who was responding.

Elements such as production and shipping delays, along with raw material sourcing, and cost control play into the reasoning behind those who reported plans to pass the financial burden onto consumers. Also, as more than half of those surveyed prioritize growing the workforce in the coming year, finding skilled talent continues to prove challenging. Things like increased wages, bonuses, and improved work-life balance are ways the industry plans to tackle the issue.

With nearly 70% of the executives projecting revenue growth in 2023, it's no wonder why recruiting firms are on the hunt for top talent to gear up for such growth. "With the peak of the pandemic behind us, food and beverage executives are eyeing the future," Louis Biscotti explained to Food Business News. But, as the average pay for a grocery stocker still hovers around $12 per hour, according to Pay Scale, the verdict is still out on how that employee can actually bring home the bacon.

It seems that food inflation will in fact continue to hit your bottom line in 2023, regardless of projected industry earnings.