Restaurant owners may be facing their biggest crisis yet as the pork price soar continuously. Food inflation is running at its highest in almost eight years, shocking seasoned economists and restaurateurs alike.
People actually began to be concerned on whether how much longer they can secure pork. Else, they just have to close business. The increase in price are affecting the entire supply chain.
Though imports have surged this year, an expected 3 million tonnes of pork from abroad can’t plug domestic needs, and Beijing only has small volumes of frozen pork in state reserves.
Pork is the most popular meat in China and at the same time it is the world’s top consumer. But due to the African swine fever, China as been short of its usual supplies.
Analyst Lu Ting says that in the past year, they have completely underestimated the pace of pork price inflation.
Farmers have been urged by China’s Vice Premier Hu Chun Hua to restock empty farms and have prompted the provincial authorities to do all they can to guarantee that the pork supply is enough by the Lunar New Year holiday.
While swine fever is still spreading, the agriculture ministry reveals that hog production should return to about 80% of normal levels. It did dipped last month but pork prices are rising again and even larger companies could come under greater pressure if inflation doesn’t subside.
In effect, wholesale chicken prices are up 33% a year ago. The increase is brought about by wide scale substitution of pork with cheaper poultry.
Furthermore, China’s popular fried chicken chains have indulged into the market’s demand.
KFC has kept the inflation under 10% and has increased the number of non-chicken items on its menu including duck meat wrap and Portobello mushroom burger. They have also opted yo use cheaper chicken parts and have replaced wings with strips of breast meat. They also have offered a wing tip bucket in July and October.
Cheif executive Joey Wat revealed how the frie wing tip is such a hit, saying a particular group of people who just love it.
KFC expects that 2020 will be another challenging year for commodity inflation but promises to be very prudent on the portion of costs passed on to customers.