With the cost of living crisis leaving people in hardship, more households are turning to consumer credit to make ends meet. Borrowing on credit cards is growing at an annual rate of 13%, according to the Bank of England’s Money and Credit Report for July 2022 – marking the fastest pace recorded since 2005. Across all forms of consumer credit, borrowing is growing at an annual rate of 4.5% – the highest rate since March 2020.

Will the cost of living crisis affect investment in food and drink businesses

The current financial climate we are living in is having substantial effects on businesses, as prices rise and people are left with far less disposable income. As inflation rises to a massive 10.1%, consumer prices are higher than ever, and according to the latest ONS report, rising food prices are the biggest contributor to this alarming increase.

With the cost of living crisis leaving people in hardship, more households are turning to consumer credit to make ends meet. Borrowing on credit cards is growing at an annual rate of 13%, according to the Bank of England’s Money and Credit Report for July 2022 – marking the fastest pace recorded since 2005. Across all forms of consumer credit, borrowing is growing at an annual rate of 4.5% – the highest rate since March 2020.

Will the cost of living crisis affect investment in food and drink businesses

So, what effect is this having on food and drink businesses beyond a decrease in their sales?

The food and drinks industry covers huge grounds, including restaurants, bars, bakeries, food manufacturers, and so much more - and the cost of living crisis is creating a negative domino effect on all.

All parts of the supply chain are having to raise their prices in order to survive, from farmers, to fishers, and factories. This rise in supplier prices means that businesses are having to then raise their consumer prices in response to this - so they too can stay afloat. However, this then means that on top of consumers dealing with the increase in energy prices, petrol prices, and overall costs of living, they are having to pay higher prices for the goods they love.

With cost of living rising, people have far less disposable income, meaning they are likely to stop buying things that aren’t considered ‘essential’ for them - and unfortunately many food and drinks businesses fall under this category. For example, if a household is trying to cut back on their spending, they are unlikely to go to a restaurant for dinner, or buy the branded chocolate bars in the shops - having an effect on these businesses sales.

So with food and drink businesses being effected by the current climate, will this effect businesses chances of getting investment? And is it the right time to invest in a food and drink business?

Businesses who are struggling during this time may look to open up for investment, but are asking themselves, is this achievable?

Simply, the answer is yes! - Although it may be slower to achieve, there are always going to be people who are in a position to do so- it’s all about putting yourself in front of those people.

At the end of the day, investing in a business can be a great way of making money, so during these uncertain times people may in fact be looking to invest more than ever as a way of securing more income.

Perfect your pitch deck

Your pitch deck is your opportunity to shine and secre those investments, and are more impotant in time like this than ever before. In this current climate investors will be drawing in pitch decks, so you need to stand out, inform and wow! Read more about how you create the perfect pitch deck here.

Expand your network

Go to the industry networking events, start posting on social media (especially LinkedIn). Doing these things will automatically find you surrounded by other experts in your field, and connections to potential investors will become far more authentic.

Perfect your finances 

In these circumstances your current finances and financial forecast will be a really important part of securing your investment. Potential investors will want to know how successful your business currently is, and growth you have had - this will help them predict whether or not you will have a profitable future.

You also want to be saving as much as you can, so reevaluate your operations and check that everything you’re doing is paying off e.g. are you utilising all of your subscriptions? Does your office need to be open everyday? Etc.

So, will the cost of living crisis affect investment in food and drink businesses? - In short, yes, but in way that is is yet to be determined, as it is dependent on a number of factors; whether your business is able to survive a hard few years, if you have a strong enough business to sell to the right investors, and whether you’re in the right places to meet with the right people.

Where there are businesses there will always be investors, so now is your time to perfect your pitch deck, expand your network, and perfect your finances!