Restaurant menu prices rose 7.6 percent in July year-over-year, a slight deceleration from June’s 40-year high.
The price of full-service meals rose 8.9 percent, while quick-service menu prices increased 7.2 percent. This is a small improvement from last month, when the industry’s menu prices lifted 7.7 percent, the largest 12-month increase since the period ending November 1981. Also in June, casual-dining prices rose 8.9 percent and quick-service prices increased 7.4 percent.
Overall U.S. inflation was 8.5 percent in July. This was lower than expected, mostly due to dropping gasoline prices. Comparatively, in June, inflation grew 9.1 percent, surpassing the 8.8 percent Dow Jones estimate.
Here’s how menu prices have stacked up for the past several months. The food away from home index has increased every month except for July:
January
- Food away from home index: 6.4 percent
- Quick-service menu prices: 8 percent
- Full-service menu prices: 7.1 percent
February
- Food away from home index: 6.8 percent
- Quick-service menu prices: 8 percent
- Full-service menu prices: 7.5 percent
March
- Food away from home index: 6.9 percent
- Quick-service menu prices: 7.2 percent
- Full-service menu prices: 8 percent
April
- Food away from home index: 7.2 percent
- Quick-service menu prices: 7 percent
- Full-service menu prices: 8.7 percent
May
- Food away from home index: 7.4 percent
- Quick-service menu prices: 7.3 percent
- Full-service menu prices: 9 percent
June
- Food away from home index: 7.7 percent
- Quick-service menu prices: 7.4 percent
- Full-service menu prices: 8.9 percent
The inflationary trend is in line with what many public chains have reported—same-store sales moving along nicely through April and May, but softness throughout June. Sweetgreen, which was forced to lay off 5 percent of its corporate staff and move to a smaller headquarters, said comps began to decelerate around Memorial Day and still haven’t returned to their previous trajectory. The fast casual responded by lowering its 2022 revenue guidance and offering a conservative estimate.
“In Sweetgreen’s 15-year history of sales patterns, we’ve never seen this before. Our historical seasonality always showed growth during this period,” CFO Mitch Reback told analysts earlier this week.
Several brands have noticed lower-end consumers tightening wallets, pushing them to emphasis value. Wingstop feels it’s in a better position than others because it can pass down decelerating bone-in wing prices. In Q2, the fast casual launched a $15.99 boneless meal deal—20 boneless wings, four flavors, two dips, and a large fry—that’s mixing 7 percent. The company is also rolling out its chicken sandwich nationwide in September at $5.49 a la carte and $7.99 for a combo.
McDonald’s CEO Chris Kempczinski told analysts the burger giant will be a net beneficiary of consumers trading down from casual-dining and fast-casual chains. John Peyton, CEO of Applebee’s and IHOP parent Dine Brands, feels the same way, and he has numbers to prove it. According to company data, while customers from household incomes under $50,000 have slightly lowered their visits, those from household incomes above $75,000 have increased frequency by 6 to 8 percentage points.
“Which suggests to us that guests that often dine at more expensive restaurants are finding Applebee’s and IHOP because of their well-known value position, which is why we perform well during tough times like this,” Peyton said. “And we actually performed well during the ’08, ’09 recession as well relative to our peers. When it comes to check management, average check has remained steady throughout the two quarters. And so, we’re not seeing evidence yet of major check management once they’re at the restaurant.”
Kempczinski also noted that McDonald’s will thrive because of the glaring gap between restaurant and grocery prices. The food at home index soared 13.1 percent in the past 12 months, the largest yearly increase since the period ending March 1979. The price for cereals and bakery products increased 15 percent over the year, fruits and vegetables increased 9.3 percent, and dairy and related products lifted 14.9 percent.
