Restaurant consumers in February were once again hit with menu price inflation not seen in years.
The food away from home index rose 6.8 percent over last year, which was the largest 12-month increase since December 1981. Limited-service meals rose 8 percent year-over-year, while full-service menu prices grew 7.5 percent.
Here’s a look at how menu price inflation has trended in the past six months (year-over-year comparisons):
August
- Food away from home index: 4.7 percent
- Quick service menu prices: 6.9 percent
- Full service menu prices : 4.9 percent
September
- Food away from home index: 4.7 percent
- Quick service menu prices : 6.7 percent
- Full service menu prices: 5.2 percent
October
- Food away from home index: 5.3 percent
- Quick service menu prices: 7.1 percent
- Full service menu prices: 5.9 percent
November
- Food away from home index: 5.8 percent
- Quick service menu prices: 7.9 percent
- Full service menu prices : 6 percent
December
- Food away from home index: 6 percent
- Quick service menu prices : 8 percent
- Full service menu prices: 6.6 percent
January
- Food away from home index: 6.4 percent
- Quick service menu prices: 8 percent
- Full service menu prices: 7.1 percent
The price hikes are unlikely to end within the next few months. Wendy’s executives recently told investors that company stores priced roughly 6 percent in the fourth quarter and expect to reach north of 5 percent in 2022.
“We’re going to watch value and value perception,” CFO Gunther Plosch said. “About 30 percent, 35 percent of our consumers are making less than $45,000 a year. So we need to make sure that we are striking the right balance and maintaining value perception.”
Meanwhile, Jack in the Box’s first quarter saw wage inflation of 10.9 percent and commodity inflation of 10.5 percent, fueled by increases in the price of beef, pork, sauces, and oil. The chain took 5.5 percent pricing year-over-year at corporate units, and CFO Tim Mullany said franchisees have maintained a sizable increase over the company price take.
But like most brands, Mullany noted Jack hasn’t seen much pushback from consumers, and that it has more room to price if necessary.
“We’re comfortable with the price take that we’ve taken,” he said. “We feel it’s in line with inflationary headwinds on the commodity and labor side. We think we do actually have more room to go on that should we need to, but we’re still in line with our original guidance of high-single digits.”
John Rivers, CEO of Florida-based 4 Rivers Smokehouse, believes consumer sentiment will inevitably turn sour. His fast casual has tried to get ahead of this future by implementing a value-oriented “Inflation Menu” that leverages lower cost of goods sold.
He doesn’t think commodity pressures will lighten until at least the back half of 2022.
“Probably one of the most strategically important things a restauranteur needs to do today is to look out six months and 12 months to start making plans and changes now,” Rivers said. “Otherwise if you manage your business from a reactionary perspective like we used to for years you’re going to get caught. Because the landslide is too steep at the moment.”
In the U.S. overall, inflation rose 7.9 percent in February, setting the highest mark since 1982.
