Restaurant menu price inflation at 40-year high
Restaurant menu prices rose at their fastest pace in 40 years in January, according to new federal data released Thursday, as operators scramble to offset their own higher costs.
Prices for food eaten away from home, which includes places like restaurants, bars and cafeterias, rose 6.4% in January from a year ago. It was the highest rate since 1982, according to the US Bureau of Labor Statistics.
But that understates the number of restaurants that charge their customers, given that the data includes public school lunch programs that have been subsidized for much of the past two years. Limited-service restaurants like Starbucks and McDonald’s have raised prices 8% over the past year, the data shows.
Full-service restaurants are not far behind, raising their prices by 7.1%.
For the most part, earnings call leaders said consumers are largely paying the price and not backing down. “We will keep a close eye on costs and pricing,” McDonald’s CEO Chris Kempczinski said last month. “But at the moment, so far, it has been well received by customers.”
Find out why customers can’t resist higher prices.
Overall, the cost of food to consumers has increased by 7% over the past year. And grocery store prices are rising at a similar rate to restaurant prices, up 7.4% from a year ago. Typically, when restaurant and grocery store prices rise at similar rates, or if inflation is higher at grocers, consumers shift some expenses to restaurants.
Restaurant owners have raised prices largely because their own costs have taken off. Producer prices for food have risen 13% over the past year, according to federal data. And wage rates have risen 10% over the past year as operators raise wages to attract more workers to meet demand amid labor shortages.
Earlier this month, Starbucks said it took a price increase in October and then another price increase in January to offset its own higher costs, and expects to raise them again in the coming months. future. The company blamed supply chain headaches, saying it had to use alternative means in recent weeks to get food and supplies to its stores because many of its distributor drivers were sick.
Despite its price increases, Starbucks’ same-store sales grew 18% in the United States in the last three months of 2021. Two-thirds of that increase came from increased traffic to its locations.
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