Hospitality businesses facing a torrid few months ahead amid rising costs and an Australian egg shortage

It’s shaping up to be a tough few months ahead for hospitality businesses in Australia between climbing food prices and shortages, despite the industry recording its best performing month based on revenue since the pandemic began.

That’s according to data from Lightspeed, a point-of-sale and e-commerce software provider, which analysed more than 10,000 restaurants, cafes and bars across the month of July.

Comparing year-on-year July 2021 with July 2022, it found revenue in bars soared 48.5%, cafes 25.7%, and restaurants 50.3%, though the figures may more likely attribute to last July’s hard lockdown, where a fifth of Australia’s population were told to stay home.

The strong figures may not continue, however, with 85% of Australians telling Finder they plan to cut back on costs amid the spiraling cost of living, with 22% saying dining and drinking would be the first thing to go.

It comes as Australian food producers are struggling with a combination of wild weather, labour shortages and the Russia-Ukraine conflict causing Australia’s fresh produce to surge in price.

Earlier this year, the country’s key growing regions of Mulgowie and the Lockyer Valley in Queensland flooded twice in a three-month period.

One farmer told the ABC he suffered a crop loss of nearly $1 million, and was forced to sack 14 staff in the aftermath of the flooding, some 80% of his workforce.

The deputy chair of Australia’s peak body representing vegetable growers AUSVEG Belinda Frentz says this sort of thing leads to eyewatering prices — like $10 lettuce.

“When we’re processing less than half of the volumes that we usually would, obviously the demand for that product increases exponentially and there’s just not the availability of the products,” she said.

Today, WA’s biggest independent food distributor warned customers to expect further price hikes as supply chain and input costs drive up prices.

New West Foods said the cost of vegetable oil, for instance, has doubled in price since August 2020, salmon is up 50% in price, cheese and bacon are up about 35%, and eggs are up a whopping 75% in cost.

Labour shortages across agriculture, transport, warehousing and hospitality sectors are as high as 160,000 vacancies, according to Independent Food Distributors Australia chief executive Richard Forbes.

“Anyone that refrigerates product in bulk — which would be practically all distributors — has seen those costs go from around $50,000 to $80,000,” he told The West Australian.

It comes as wild weather is seeing an egg shortage in Australia, according to supermarket giant Woolworths, which warned “customers may notice reduced availability at the moment” as a result of reduced production on farms.

The shortage is partly because of wet weather. About half of all eggs sold are free range, according to Australian Eggs, while 40% are cage eggs and 10% are barn-laid eggs, but a chilly and rainy few months has seen the winter production fall.

Coles has enforced a two-carton rule since July, but there are no egg limits on customers at Woolworths.