799 percent increase: Price balance in the sector has completely collapsed

According to TUIK data, while the change in the general inflation index over the last 5 years was 508 percent, it reached 674 percent for food and 704 percent for restaurants and hotels.

INCREASED BY 799 PERCENT

In the details, the change in the index for meals eaten in restaurants, patisseries, cafes, etc., increased by 799 percent over 5 years, and beverages increased by 542 percent.

Özder Şeyda Uyanık from Ekonomim, compiled information on the subject from the "Recent Pricing Developments in the Food Services Sector" report prepared by the Central Bank's Economic Research unit.

FOOD SECTOR EXPERIENCED MUCH HIGHER PRICE INCREASES COMPARED TO FOOD PRODUCTS

Accordingly, while a contraction was observed in accommodation and food services during the pandemic period, data above the average was encountered in the 2021-2022 period. Another point that draws attention is that when food service is separated from food inflation, it shows a much higher price increase trend.

When looking at the costs of the food sector, the reason for the picture becomes clear. While the index for red meat rose to approximately 1800, this index reached the 1600 level for chicken-based products and has shown a decline in recent months.

Although home-cooked meals are at the lowest level in terms of cost, they are experiencing levels around 1500. Fast food is more expensive than home-cooked meals; it rises to an index level of 1600, similar to chicken meat.

PRICES ARE HIGH 

When price increases are tracked for products where red meat is predominant, the price-to-cost ratio stands at 1.55 levels as the rise in product prices strains costs. In chicken, although the raw material price increase covering chicken skewers and chicken doner remains relatively behind, its reflection from cost to price is higher, at 1.8 levels.

Home-cooked meals have been experiencing price increases since 2023. Accordingly, home-cooked meals have risen from 0.7 to 1.3. When looking at the food products most ordered in Turkey, it is notable that fast food is the top preference.

FAST FOOD ALWAYS WINS

The price/cost ratio, or "profit margin," of products in the fast-food category has never lost its upward trend from 2013 to July 2024. Consequently, it is understood that they are sold at a price approximately twice their cost, at 2.1.

In its assessment, the Central Bank noted that a significant price increase occurred in 2023, stating, "This implies that pricing is being done above cost increases and that there has been a significant deterioration in sector pricing behaviors in recent years. Furthermore, the analyses indicate that the deterioration in pricing behaviors varies according to food concepts."

The Central Bank continued its report as follows:

"It is observed that while the price/cost difference between different concepts was relatively limited in past periods, this gap has widened significantly over time. As of July 2024, it is seen that the price/cost differentiation in fast-food and chicken-based food services is much more pronounced than the differentiation in home-style cooking and red meat-based food services."