McDonald’s salad supplier Agrial loses custom after price increases

McDonald’s salad supplier Agrial Fresh Produce has cut its loss thanks to price increases after what it described as three years of “upheaval” due to labour shortages and soaring costs, according to newly-filed documents.

The Staffordshire-headquartered company, which also owns the pre-packed salad brand Florette, cut its pre-tax loss to £5.5m in 2023 – an improvement on its pre-tax loss of £7.7m in the previous 12 months.

This was despite the producer seeing its turnover dip to £107.5m, from £115.8m in 2022, which it said had been driven by lower demand “across the retail salad category” due to increasing price pressures”.

The business, which is owned by the French co-operative group, Agrial, said that it had compensated for these soaring costs by increasing its customer prices to “recover inflation”, which it said had been “essential to the sustainability” of the business.

It added that as a result it had lost retailer customers, but this had been partially compensated by wins within its food service division.

During the period the company shed 32 jobs, bringing its total number of employees to 868 from 900 in the year before.

Agrial confronts ‘economic reality’

In a statement published to Companies House, the firm said: “2023’s dominant issue has remained the inflationary pressures, both in our supply chain, the wider market, and the economy as a whole.

“Whilst we saw inflation in the market easing towards the latter part of the year, we are still a long way from a flat or deflationary position.

“Labour costs increased significantly again in 2023, driven by CPI and statutory minimums, helping to address the cost of living crisis.

“Fortunately, the increases no longer seem to relate to scarcity and labour supply in suitable to meet demand in most cases. The labour cost increase impacts us both directly in our business and in our wider supply chain.

“Our response to these increases has continued to take two routes: in addition to bolstering our programme of optimising and mitigating costs in our day to day operations, we’ve also implemented the re-structuring of the shifts and working patterns in our two biggest sites

“Whilst ensuring that quality and safety remain paramount, and service level is not impacted, our operating windows have been refined to optimise our available vs required capacity.

“We have [also] continued to work with our customers to mitigate, where possible and, after exhausting that, passed on cost increases.

“This process remains difficult, and we appreciate the challenges facing our customers too, but this economic reality remains essential in this inflationary market.”