Editor’s Note: Connecting the Dots is a series of monthly conversations with Michael Dominguez, President and CEO of Associated Luxury Hotels International. The series examines issues in the global economy that will “connect the dots” to be helpful not only in business but in life as well.
Michael Dominguez: Wow, my favorite topic of talking about food and beverage, and costs and what that means for you, the meeting professional. We are always talking at length, trying to help you talk to a stakeholder on what is happening in the food and beverage environment specifically, and what that means for your budgets and how you approach business moving forward.
You know, one of the easiest things to talk to a stakeholder about is in January of 2024, McKinsey was reporting and showing that worldwide food costs basically were 18% higher than it was in 2019. At the end of Q3 of 2024, it is now 22% higher than 2019. It's getting more expensive, not less. We have issues across the board, and there are continuous agricultural issues that happen from time to time. But they’re unique and all kind of hitting at the same time.
I can't believe I'm talking about eggs again. I tend to talk about eggs every 18 months, but we're talking about eggs again. Eggs are extremely expensive. A lot of this has to do with a bird flu that put down 20 million birds here in the United States. The one thing I always tell everybody is the good thing is chickens repopulate really quickly, so we will be back to normal down the road. But in the short term, eggs are scarce and most importantly, very expensive. That is going to be something that adds cost to something traditionally that you really wouldn't think as being more expensive, breakfast.
But let's add to that that coffee is at the highest point we've seen literally all time. This all has to do with droughts, literally, in the areas that grow the most coffee beans and this is going to continue to put pressure on pricing of coffee.
Coffee has skyrocketed. Cocoa has skyrocketed, which means chocolate is really expensive. Olive oil is through the roof. Olive oil is now known as liquid gold because it's so expensive. And then most importantly, orange juice is five times more expensive than it was in 2019. This has to do with a lot of the weather patterns we've seen in Florida over the last few years.
Why does all that matter? Take coffee, orange juice and eggs, and breakfast is a very expensive proposition at the moment. This does not mean you absolutely are going to pay more. What this means is it's important to have conversation with your hotels. It's important to let them know and let's be really open on what you're trying to accomplish so that the hotels can work with you.
It is going to be an environment that is going to continue to stay a little bit steady as far as increased pricing. Here is some good news. Not everything is more expensive. For the first time, pork is cheaper. So, pork was through the roof when we had a swine flu a couple of years ago that has now minimized. Beef? Very expensive. Pork? Not as much. You're going to have options and I will tell you, seafood is actually showing a little bit of cost deceleration, which is good for everybody, so there are options, but it's important to actually have conversations. Talk to your hotels, talk to their food and beverage departments to figure out how you work together to accomplish what you need to.
It's going to be a really tough environment for the short period of time, so it's really important for all of us to be able to work together.