Helping Food Retailers Navigate Rising Costs with Flexible Finance

According to the British Retail Consortium (BRC), food prices across the country continue to rise, causing significant problems for the food retail industry.

July saw grocery inflation rise by around 4% year-on-year, with essentials like meat and butter seeing double-digit increases. These increases mean tighter household budgets for consumers. But it’s also a big issue for food retailers who will be feeling the pressure of rapidly shrinking margins in an already tight operating environment.

As a broker, you may notice that some of your small business clients (like independent retailers, cafés, and convenience stores) are finding it especially difficult to balance rising supplier costs, higher energy bills and wage increases. It’s a big problem, as sales volumes in food stores remain well below pre-pandemic levels (7.4%, to be precise), highlighting just how persistent these challenges have become.

This squeeze is driving a surge in demand for business funding, with our data showing a 35% year-on-year increase in funded deals across the food retail sector. And brokers are at the heart of this shift. More than three-quarters of the applications that come through our business are from introducers.

With the environment as it is, now is the time to guide your clients through the turbulence and connect them with flexible finance solutions that support their growth rather than hinder it.

Issues In The Food Retail Industry

As reported by the BRC, food retailers are facing an exceptionally tough trading environment. While food inflation has moderated since its 2023 peak of 19%, it remains uncomfortably high.

The challenge for retailers is that production and supply chain costs are rising faster than they can pass on to customers. Although their operating costs are going up, it’s not always the answer to pass on these increases to customers, who may end up taking their money elsewhere.

The rise in food prices also affects food retailers in a more indirect way. Over the summer, many retailers struggled and blamed the uncertainty about the economic outlook for causing many customers to keep their wallets shut. With tighter household spending, consumers are rethinking how they spend their money.

At 365 Finance, we’ve also found that food retailers in London and the South East account for nearly half of all the applications we receive. This mirrors where high street pressures are most concentrated.

A Growing Need For Funding

This financial strain on food retailers is translating into a marked increase in demand for funding. Our internal data has shown a 35% year-on-year rise in funded deals across the food retail sector. 

The drivers of this demand are clear. Retailers need additional cash flow to:

1. Bulk-buy stock before further price rises
2. Cover rising wage and energy bills
3. Invest in small refurbishments and promotional materials to attract customers
4. Manage other general operating costs

Importantly, the surge in demand is not just a sign of strain; it’s also evidence of resilience. Food retail remains a cornerstone of the high street, and many businesses are finding ways to adapt. Finance is becoming a tool to bridge the gap between costs and revenue.

For brokers, this trend represents a growing opportunity. Your clients are already seeking liquidity, and being able to guide them toward flexible solutions adds genuine value to the broker–client relationship.

At 365 Finance, we think that when margins are thin, finance that flexes with sales can be the difference between survival and growth – that’s why we design our revenue-based finance solutions with small business owners in mind.

The Importance of Brokers for SMEs

More than three-quarters of our food retailer funding applications now come through brokers, which proves the importance of introducers in today’s market. The growing demand for brokers comes from the fact that many small business owners have given up on traditional financing, citing lengthy applications, high aversion to risk and inflexible repayment structures. 

Rather than traditional funding, SMEs are increasingly relying on trusted intermediaries to point them in the right direction.

We find that this is particularly important when introducing solutions like revenue-based finance, which many small business owners may be currently unaware of. Unlike fixed-term bank loans, these products adapt to sales cycles and provide a more flexible solution to generating funds without agreeing to unreasonable monthly repayments.

As a broker, you can frame these types of products as a lifeline for retailers facing unpredictable trading conditions who don’t like the idea of going down the typical bank loan process.

Sectors Where Brokers Can Provide Value

Food retail is a large sector, and funding needs can change depending on the type of business. If you’re a broker working in this area, knowing the nuances between different businesses and their financing needs can help you find the best solutions that resonate directly with client needs.

Here are some examples of different sectors where you can provide value to your clients:

1. Hospitality
   1. Restaurants, cafés, and takeaways face changing input costs, particularly in poultry, dairy and fresh produce. Flexible funding allows them to cover seasonal staffing costs, adapt menus quickly or manage overheads during quieter trading months.
2. Independent retailers
   1. Local shops and specialist food retailers often need working capital to bulk-buy stock before suppliers raise prices again. Finance gives them the confidence to secure inventory early, protect margins and maintain competitive pricing for their customers.
3. Convenience stores
   1. Corner shops can find that rising supplier prices make it difficult to keep shelves full. Short-term funding can support stock rotation, cover unexpected bills, and keep operations running smoothly.

Why Revenue-Based Finance Works for Food Retailers

For many small business owners, traditional loans can feel out of step with the realities of day-to-day trading. Fixed repayments don’t always match fluctuating revenue, especially in sectors like food retail, where margins are under pressure and sales can swing seasonally.

Revenue-based finance offers an alternative. Instead of fixed monthly instalments, repayments are tied directly to card sales. On busy weeks, more is repaid. When sales dip, repayments adjust accordingly. We believe that this flexibility is crucial to help businesses manage cash flow without the fear of missing payment deadlines.

For food retailers, this model can be particularly effective. It means they can access funding to cover stock, wages or rising bills without locking themselves into inflexible commitments. With costs from suppliers, energy and wages showing no signs of falling, the ability to scale repayments in line with turnover provides breathing space to plan ahead.

Final Thoughts

Rising food prices are squeezing retailers’ margins, and demand for funding is climbing as a result. Applications are increasingly channelled through brokers, especially in London and the South East, where prices are higher than average.

This environment calls for brokers to support their small business clients and offer alternative methods of funding their business. By introducing clients to flexible, revenue-based finance through 365 Finance, you can offer solutions that adapt to retail sales cycles and help facilitate long-term growth.

At 365 Finance, we provide revenue-based funding of £10,000 to £500,000 in capital so your customers can thrive all year round. We collaborate with thousands of UK brokerages, providing unsecured finance solutions to small businesses – and market-beating commissions for you as an introducer.

To find out more, please contact a member of our partnerships team or learn more on our website.