Hormuz does not hit your bill today: hospitality price rises land in October

Gas doesn't only fire up your griddle. Gas is used to make the fertilizer farmers put on their fields.

Gas goes up → fertilizer goes up → what gets planted goes up → six months later, your delivery note goes up.

That's the trap. You feel electricity next month. You feel food six months late.

Spain barely buys fertilizer that passes through Hormuz. The industry association says ours comes from Egypt, Algeria and Russia.

Doesn't matter. Fertilizer is priced on the world market, and so is the gas used to make it. We dodge the ship, not the bill.

The FAO reckons fertilizer will rise between 15% and 20% this year.

This started on 28 February. From fertilizer to the plate takes about six months.

February + 6 = late August (first warning). By late April fertiliser was already 50% more expensive. April + 6 = late October (the hit).

September arrives bruised and October full-on: right when summer cash has gone on payroll, self-employed contributions and VAT.

The menu has nowhere left to go. A third of chains admit raising prices was their main lever and they cannot go further without losing customers.

Prices go up in a lift and come down by the stairs. Even if Hormuz opens tomorrow, your supplier will not cut as fast as they raised. UNCTAD warns: food and freight take longer to recover than energy.

The upside: this time you can see it coming. You have two months. In 2022 nobody did.

Four paths:

1. Via fertilizer. Arrives in September and October. Veg, potato, pulses and cereal. And everything that eats feed: chicken, pork, eggs and milk. In March eggs were already up 21% and pulses 19%.

2. Via energy. Already here. Everything that goes through a cold room or an oven before it reaches you: frozen, dairy, bakery, preserves. And your own kitchen.

3. Via the ship. When it's time to renew prices. What comes from outside Europe: rice, frozen prawns and squid, coffee, spices. And packaging, which almost nobody puts in the recipe costing: film, trays and takeaway pots come from oil. Shipping a container has cost twice as much in three months.

4. Via diesel. They're already passing it on. Delivery. Either as a surcharge or buried inside the price.

What moves least: local, seasonal fresh. Less ship and less cold on top.

A bar turning over 40.000 € al mes.

Example figures, our own estimate from a typical cost structure; they vary a lot from one venue to another.

What it spends today:

• On food and drink: €12,800 (32%)
• On electricity and gas: €1,600 (4%)
• Net left: €3,200

What it will spend in autumn, with that 7% on food and 20% more on electricity:

• Food: +€896
• Electricity and gas: +€320
• Total: €1,216 more every month

More than a third of what was left clean. To cover it with the menu alone: +3% (coffee from 1.60 € to 1.65 €; set lunch from 14 € to 14.45 €). Whether your customer accepts that in October is something only you know.

1. Take your five best-selling dishes and re-do the recipe costing with today's prices. Today's prices, not last year's. If you've never done it, start with the one that sells most.
2. Call your three biggest suppliers and ask what they're planning for September. The one who tells you is giving you two months.
3. Check delivery notes from the last three months and look for the fuel surcharge. If it has appeared or grown, you're already paying for Hormuz without knowing it.
4. Look at which dishes you can swap an imported product for a local one without the guest noticing.
5. Decide now when you're going to raise the menu. With a number: "if this dish goes over 33%, I raise." In October, in a rush, you decide badly.

That 7% may undershoot. Funcas calculated it on 6 May assuming the war would end in a month. It didn't. They themselves run another scenario, with a long blockade, where everything rises more.

Nobody knows if Hormuz opens. On 29 July Iran proposed sharing Strait traffic with Oman. Nothing signed.

Government support is an unknown. Funcas's figures assume measures last until October, but electricity VAT already went back to 21% in June. If nothing else is extended, the autumn bill will be worse than expected.