Cost pressures remained intense on QSRs due to rise in cost of goods, wage inflation

All operators that answered to a new Jarden/QSR Media survey are planning price increases over the course of 2022.

Cost pressures are still a challenge for the QSR industry, a key drivers of inflation are rise in cost of goods (COGS) as well as labour inflation.

According to a collaborative survey from Jarden and QSR Media of 12 operators from the QSR industry, the expected sales growth was at 7.6% year-on-year to offset the weighted average cost inflation of 8.4%.

Respondents said the key driver of inflation was a 9.6% year-on-year increase in COGS and 6.3% year-on-year increase in wage inflation, whilst rents remain benign at around 2%.

“Importantly, wage increases have likely been impacted by the large minimum and award wage increase this year, exacerbating already intense labour market pressures,” read the report.

All of the 12 operators are planning to increase or have already increased their prices in 2022, with a weighted average expected increase of 6% to mitigate cost pressures.

These planned price rises, however, are still below the level of cost of inflation, which means the EBITDA margin will likely shrink this year. 

Supply chain issues, meanwhile, are moderating whilst labour issues have become the primary challenge.

“This aligns with the vacancies data, which shows job vacancies in hospitality have increased to a record high of 7%,” said Jarden.

The collaborative poll was conducted from 2 September 2022 to 20 September 2022, with respondents guaranteed with anonymity.

You may download the full report here.