Foodservice Update Q4 2022: What’s on the Menu? Special Edition Food Costs Outlook

Food prices have escalated in 2022 and uncertainty about 2023 is high, making purchasing planning and strategies for the coming year even more difficult than usual. We have asked our colleagues, food & agribusiness specialists in various segments, what their expectations are for the near future in terms of prices for items such as dairy, fresh products, bakery products, meat and beyond.

Report summary

Volatility and uncertainty were mentioned by almost all our colleagues. This is intrinsic to agricultural products. Many prices, in particular in fresh products, are supply-driven, and weather events or animal diseases have a crucial impact. But for 2023, other uncertainties add to the equation, in particular energy prices. 

For animal protein, regional differences may play a big role, reflecting their specific supply-demand balance. In the US, prices may decline for chicken and pork, less so for beef. In China, both pork and chicken prices are expected to remain high. Chicken is also likely to be expensive in Europe, where pork and beef prices may be somewhat lower, although we don’t expect a significant decline. Eggs will be expensive everywhere.

High prices for energy and other commodities are still feeding through the value chain. Expect to see higher prices for some food items at least in 1H, affecting Europe but also other markets. Processed and frozen vegetables, included french fries are a clear example. But also beer, wild catch, and processed fish are likely to be more expensive for that reason. Prices may come down in 2H. 

Anything cheaper in 2023? Coffee and vegetable oils (except for olive oil), and prawns during 1H. In Europe, cartonboard is also expected to be more affordable. Several other food prices are also expected to be lower than in 2022, although not necessarily cheap as they are still expensive compared to the past. This is the case for dairy in general. 

In conclusion, foodservice operators need to assume that costs will remain elevated. There may be some opportunities to reengineer menus or to time purchases (buying dairy early in the year), but, overall, cost savings/margin support may need to come from greater efficiencies and well-thought-out price increases. With persisting uncertainties, there is more to gain from building up long-lasting strategic relationships with suppliers than relying on opportunistic deals.