In a recent study conducted by Sapio Research and, shedding light on the far-reaching consequences of the cost-of-living crisis, over 250 businesses, spanning industries such as bakeries, convenience stores, higher education caterers, pubs, and coffee shops, reported significant challenges.

The standout revelation from the survey, conducted over the summer months, is that a staggering 59% of businesses disclosed a decline in trading compared to the previous 12 months.

Delving deeper into the findings, when questioned about the most impactful price increases on their bottom line, businesses identified the top three factors:

  1. 74% cited product price increases driven by rising ingredient costs.
  2. 69% pointed to increases in utilities.
  3. 40% highlighted rises in facilities (mortgage, rent, etc.) and packaging costs.

Additional insights from the research underscored the broader repercussions of the cost-of-living crisis:

  • A notable 45% of businesses reported a slight decline in overall sales of fresh sweet bakery products, with 10% experiencing a significant downturn.
  • Three-fifths of companies observed a decrease in average spend per customer compared to the preceding 12 months.
  • An overwhelming 86% witnessed an increase in customers switching products.

In response to these challenges, businesses are adapting their strategies to stay competitive. Notably, there is a notable shift in product formats, with increased usage of frozen unbaked products (50%) and frozen baked products (47%) reported among respondents exploring innovative avenues.

Helen Sinclair, UK Marketing Manager at Baker & Baker, remarked on the unprecedented nature of the times, stating: “It looks like we’re in for a bit more pain before things start to improve.” When asked about the anticipated resolution to the cost-of-living crisis, 54% of respondents expressed optimism for improvement by the end of the year, while 29% either remained uncertain or expected relief to extend beyond summer 2024.

The comprehensive report, inclusive of independent analysis by Sapio Research, not only delves into the challenges faced by businesses but also provides practical tips for remaining competitive in these turbulent times. Suggestions include ensuring products maintain an appealing aesthetic, exploring multi-product baking, and leveraging diverse formats to navigate the economic uncertainties.

To learn more about the research, download a copy of the report here.

Editorial contact::
Editor: Kiran Grewal kgrewal@kennedys.co.uk