Reduction in domestic food prices affects bars and restaurants %%page%%

While food prices are falling, eating at home is becoming increasingly cheaper. However, the movement seen in the food away from home sector is the opposite – the difficulty in passing on the increase in the prices of inputs to final products, in past years, put the sector at a disadvantage. This is the analysis of João Ricardo Tonin, economist at FoodCo.

In June, there was a deflation of 0.66% in the food and beverage sector. Considering only domestic food, the decrease was 1.07%. On the other hand, food away from home recorded an increase in inflation of 0.46%. For Tonin, if the prices of food for domestic consumption continue to fall in the coming months, there will be a slowdown in the sector of food away from home.

The economist explains that this scenario is a direct consequence of the pandemic and its resumption. During the pandemic period, several agricultural products had their prices more than doubled, which encouraged an increase in production. This increase, however, was not accompanied by a demand from global consumption, which resulted in an excess of production. So now we see a slow reduction in food prices.

The difficulty for bars and restaurants to pass on price increases during the peak of the pandemic period now puts them at a disadvantage. Even so, Tonin points out that the current drop in food prices is an opportunity for establishments to improve their profit margin.

“We are going to have to be very attentive to the difference between food inside the home and food outside the home. If the price difference gets too high, it is likely that the consumer will have a greater incentive to consume products at home, which will end up affecting the consumption of food away from home”, concludes the economist.

The FoodCo. with the complete and audio analysis of the economist João Ricardo Tonin is an exclusive weekly content for the platform’s subscribers. FoodCo. is the largest community of bar and restaurant owners in Brazil. There are more than 13,000 entrepreneurs in the sector gathered in a network of knowledge and networking, with access to essential content for those who undertake food outside the home.