US Food & Beverage Industry Faces Rising Costs and Economic Uncertainty
US Food & Beverage Sector Faces Rising Costs and Economic Uncertainty, Expert Market Report Reveals
New insights from Expert Market’s 2024 Food & Beverage (F&B) Industry Report highlight the significant challenges facing US food and beverage businesses. According to the report, which is sponsored by the hospitality platform Toast, 56% of F&B owners are grappling with managing operational costs and profitability. Of these, 52% are particularly worried about rising rental costs. Economic uncertainty is the second major concern, affecting 52% of the respondents.
Key Challenges for US F&B Businesses:
- Managing Operational Costs and Profitability (56%)
- Economic Uncertainty (52%)
- Coping with Seasonality and Business Fluctuations (37%)
Impact of Economic Instability on F&B Businesses
The Expert Market report underscores how financial and economic uncertainties are impacting the F&B sector. The inflationary pressures experienced since the COVID-19 pandemic are still being felt, despite inflation rates dropping from a peak of 7% in 2021 to 2.97% in recent times. However, this rate remains higher than the pre-pandemic level of around 1.9% in 2018.
One of the primary concerns for F&B businesses is the increase in rental costs. The report reveals that 52% of F&B industry workers, including owners, are troubled by rising rents. This issue is compounded by broader inflationary pressures, with 37% of respondents citing ingredient cost fluctuations as a significant operational challenge. The strain is evident from data showing that 43% of small business owners in the US struggled to pay their full rent on time as of April 2024.
A Glimmer of Optimism
Despite these challenges, the future holds some promise. Predictions for 2025 suggest that concerns about economic uncertainty will decrease from 20% to 16%. This optimism is supported by expectations of a recovering American economy, with consumer spending on the rise and inflation and interest rates potentially decreasing in late 2024 to 2025.
To navigate the evolving economic landscape, Expert Market advises F&B businesses to adopt targeted strategies such as advanced financial management software and customer loyalty programs. These measures can help businesses adapt and thrive amid economic shifts.
Expert Insight
Chris Maillard, Editor at Expert Market, commented on the report’s findings: “As our research indicates, the food and beverage industry has faced significant challenges recently. Inflation and rising costs for energy-intensive kitchen equipment and prime rental sites have been particularly tough. However, it’s encouraging to see ongoing optimism. Savvy operators are streamlining their processes and systems, which will position them to recover more swiftly as the economy improves.”