Be Prepared: Raw Ingredient Prices Are Skyrocketing

Bonji Hot Takes: Volume 9

Hi all, welcome back to Bonji Hot Takes, where we address some of the opinions and knowledge that we've picked up along our journey in the industry. We are here to offer assistance, stories, and hopefully some value!

­­­­

We have discussed the rising prices in the past, but we've learned much more ourselves since then. To begin, we want to share a personal story about the upstream supply system. This past holiday season, we were told that carrier and shipping prices for our raw ingredients were going to at least 4x, then slowly decrease into the new year. Yet, as we write to you in February, we can confirm that those prices haven't diminished, and if anything, have increased even more. Additionally, we then learned that the raw ingredient producers are telling their distributors that they cannot supply a quantity higher than last year, so they should try to avoid taking on new customers. If they do plan on growing or adding new clients (as every business does), they should expect at least a 20% price increase (which we believe could potentially be much higher). Thus, this leads to the downstream effect of everything becoming more expensive. When you are ordering raw ingredients, prices are up. When you are buying fully produced products, prices are up. When you sell to your customers, prices are up. It's a trickle down effect, starting at the shortage of raw materials, labor, truck-drivers, and more. When we saw this happening to our own supply and system, we chose not to be a part of the mass craze of increasing prices for our partners and customers. Instead, we chose to expand vendors to remain competitive and find the pricing that worked for us, regardless if it took extra work. This is truly affecting everyone, not solely distributors, restaurants, or supermarkets. For example, we've seen it happen in the past, but Chipotle's CEO announced this week that price increases should be expected. Although many may consider Chipotle to simply be a greedy company, regardless if it may be true or not, these are clear impacts of costs of goods growing. Furthermore, a recent TikTok went viral showcasing Walmart's prices increasing on everyday items. It's a scary sight that many blame on inflation, which plays its own role, but the shortage of materials and shipping capabilities are scorching prices.

­­­­­­­­­­­­­­­­­­­­­­­­­­­

________________________

Our Suggestions:

• Expand your vendors - don't think that there isn't a choice

• Buy in bulk and keep more inventory now in case of massive $ spikes - if viable

  • Think about buying frozen ingredients instead of fresh

• Consolidate your menu and crossover ingredients into various dishes

­­________________________

Key Takeaways:

• Expect price increases on goods/ingredients due to upstream price spikes

• Raw ingredient producers are telling their buyers to halt growth or to expect expensive fees

• Fewer truckers on the road = higher shipping rates

• Consider raising your store's prices, working with multiple vendors, buying in bulk or frozen, and consolidating your menu

­­