The restaurant industry in March continued to experience inflation not seen in decades, according to the Bureau of Labor Statistics.
The food away from home index rose 6.9 percent year-over-year, the largest 12-month increase since December 1981. Full-service meals rose 8 percent, while quick-service menu prices increased 7.2 percent.
Here’s how inflation has trended for food and drink places in the past few months:
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
February
- Food away from home index: 6.8 percent
- Quick service menu prices: 8 percent
- Full service menu prices : 7.5 percent
Much of the jump in menu prices has been influenced by the rising costs of commodities. According to the most recent Producer Price Index, food prices increased 12.8 percent year-over-year, including jumps in beef and veal (43.9 percent), grains (22 percent), shortening and cooking oils (36.4 percent), and eggs (40.9 percent).
Restaurants have also continued to raise wages to attract and retain workers, but the labor market continues to be difficult. Food and drink establishments only added 61,000 jobs in March.
Additionally, in February, 863,000 quit their jobs in leisure and hospitality, representing about 21 percent of the private sector. It was the most since November, when 881,000 quit their jobs. There were also 1.7 million job openings in February, which is more than October, November, and January, but fewer than the 1.97 million openings in December.
A recent survey by Revenue Management Solutions found that 68 percent of consumers feel restaurant prices are higher or much higher, which almost double the percentage of Q1 2021. When asked why they were getting less value from a restaurant visit, 82 percent credited “higher prices.”
The same survey—which took place March 4-7—showed reported visits to drive-thrus and quick-service restaurants decreased compared to 2021.
4 Rivers Smokehouse CEO John Rivers told QSR in early March that he fears an upcoming backlash from consumers over menu price inflation. That’s why his fast casual is preparing itself with a value-based “Inflation Menu” to build goodwill with guests.
“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,” he adds. “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.”
