For many Australians, a cheeky trip to the local burger joint can be a welcome distraction from the pressures of everyday life. But with inflation soaring, fast food vendors aren’t safe from economic pressures, either — and the humble burger may be one of the clearest indications of how sharply costs are rising.
The latest batch of Consumer Price Index (CPI) data shows headline inflation grew 6.1% over the year to June, but a closer look reveals crucial ingredients are rising faster than broader data would suggest.
The cost of vegetables has grown nearly 16% over the year, the Australian Bureau of Statistics said, owing to the floods which damaged growing regions in northern New South Wales and southeast Queensland earlier this year.
Cooking oil has rocketed in price, too, up nearly 15%.
Other burger essentials have come under the pump. Beef is up 9% in some capital cities, while bread has risen in price by nearly 7%. Dairy and eggs have become around 5% dearer.
But the true cost for neighbourhood burger slingers may be even more profound than the official figures suggest.
Hash Tayeh, founder of Melbourne-based chain Burgertory, says the cost of some vital ingredients has soared as much as 70% in recent months.
“The price rises are unprecedented,” Tayeh told SmartCompany.
Most notable is the surging cost of cooking oil.
“We’ve seen price rises of 20% to 30%, but when you’re talking about oil, you’re looking at rises of 60% to 70%,” Tayeh said.
“That’s actually part of the reason why a lot of our suppliers are raising the price on us, because their oil costs have soared as well.”
Cooking oil prices reached record prices in April, the Australian Trade and Investment Commission said, as droughts in key soybean growing hotspots worldwide coincided with conflict in Ukraine, one of the world’s most significant sunflower oil producing regions.
“Australian vegetable oil exporters are likely to gain from record high prices,” the organisation said at the time.
Burgertory, which operates 15 stores across Melbourne, sources Australian cottonseed oil for its restaurants.
Tayeh says it was likely local oil producers are simply answering demand from the global market, “which then obviously means that there’s less oil for us”.
To secure its meat and some other fresh ingredients, the burger chain has taken to negotiating deals directly with abattoirs and farmers across Tasmania and Queensland, Tayeh adds.
Finding cost-savings means the chain can leave menu price increases as a last resort, he says.
“I actually consider Burgertory on the upper side of the market in terms of costing, so we’re trying not to put prices up or compromise on our product.
“But that’s not to say we won’t be raising our prices. It all depends on how the market continues to act… We don’t really know what to expect.”
And small hospitality businesses which do raise prices are unlikely to be profit-taking, he added, reflecting on the rising cost of energy and labour shortages facing the sector.
Even though their own household budgets are being stretched thin, Tayeh says consumers should be patient with their favourite eateries.
“This inflation is across the board, and it’s not with any particular hospitality business.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
