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British Restaurant Chains Gird For Sharper Sting From Inflation

Published on Jun 1 2022 12:02 PM in Restaurant tagged: Restaurant Group / Frankie & Benny's / Wagamama / Upper Crust / SSP Group

British Restaurant Chains Gird For Sharper Sting From Inflation

The owners of British restaurant chains Wagamama and Upper Crust have warned that inflation would worsen this year as the war in Ukraine exacerbates a rise in food, commodity and energy prices.

The warnings come as British households face a major cost-of-living squeeze from the highest inflation in four decades and restaurant operators attempt to recover from the havoc wreaked by the pandemic.

Restaurant Group Plc RTN.L, operator of Asian food chain Wagamama and Italian-American-themed Frankie & Benny's restaurants, projected food and drink inflation to reach 9% to 10% this year, compared with a 5% estimate given in March.

SSP Group Plc SSPG.L, which runs the Upper Crust brand of sandwich shops along commuter routes, said it expected inflation to "step up" through the second half and into next year.

"Where there is low labour availability, this is also resulting in higher labour costs," SSP said in a statement.

The Ukraine crisis and global supply chain disruptions that began during the pandemic have spurred price increases worldwide, making everything from fuel to food more expensive.

Both SSP and Restaurant Group are taking steps to protect their business from inflation. SSP said it was promoting more profitable menu items, while Restaurant Group said it was working with its supply chain partners to mitigate the impact.

Still, Restaurant Group posted stronger like-for-like sales across its Wagamama and pub locations for the year-to-date period as more diners visited restaurants than a year earlier.

FTSE 250-listed .FTMC SSP reported a much smaller half-yearly loss and said that it expected sales to near pre-pandemic levels in the second half of the year, as people travel more and return to offices.

Upper Crust Owner Upbeat On Sales After Reporting Smaller Loss

The above news followed news that Britain's SSP SSPG.L, which runs the Upper Crust chain of sandwich shops, has said that it expects sales to near pre-pandemic levels in the second half of the year, as people travel more and return to offices.

The group said loss before tax came in at £2.3 million for the six months ended March 31, compared with £299.7 million a year earlier.

Wagamama Owner Expects Food And Drink Inflation To Worsen

All of the above news followed news that the owner of British restaurant chain Wagamama has projected food and drink inflation to reach 9%-10% this year, nearly double its estimate from two months ago, as the Ukraine conflict drives up commodity prices.

Restaurant Group Plc RTN.L said that strong sales at Wagamama and its Frankie & Benny's chain of restaurants were helping offset the impact of inflation on expenses. The company kept its full-year outlook unchanged.

"In-line with cost pressures experienced across the sector that have been exacerbated by the war in Ukraine, food and drink inflation is now expected to be around 9% to 10% in FY22, versus the 5%+ outlined ... in March," the company said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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