Restaurant menu prices reached another 40-year high in June, as consumers’ wallets continue to feel pressure.
The food away from home index lifted 7.7 percent year-over-year, the largest 12-month increase since the period ending November 1981, according to the Bureau of Labor Statistics. Full-service meal prices rose 8.9 percent while quick-service menus increased 7.4 percent. Here’s how inflation has trended over the past few months:
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
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
Overall U.S. inflation was 9.1 percent, surpassing the 8.8 percent Dow Jones estimate. In May, it was 8.6 percent.
Firehouse Subs CEO Don Fox found that restaurants are operating in the fourth-highest rate of inflation in the modern history of the U.S. He noted that current rates are similar to what occurred in 1973 when inflation changed from 5.5 percent in May to 8.7 percent seven months later. In current times, the U.S. hit 5.4 percent in June 2021, and a year later, finds itself at 9.1 percent. During that cycle nearly 50 years ago, inflation reached 12.3 percent in December 1974 and didn’t fall below 10 percent until May 1975.
“The restaurant industry currently faces a number of challenges, several of which are either direct results of the pandemic, or highly influenced by it,” Fox said in his monthly QSR magazine column. “But I dare say that the current rate of inflation and its dual impact on the consumer wallet and the restaurant operator’s input costs is for many operators at the top of the list of challenges. Staffing challenges are perhaps the lone contender for the top spot.”
Foodservices and drinking places earned $84.98 billion in May, according to the U.S. Census Bureau, just a 0.7 percent increase from April. Chip West, a retail and consumer behavior expert at marketing solutions company Vericast, said the slow-moving sales were directly related to rising menu and gas prices.
Dante DiCicco, a former builder of Snapchat and third-generation restaurateur, told QSR that a recession is coming. He pointed to a recent report by Morgan Stanley showing the likelihood of a recession on most econometric models has risen from 30 percent to 60 percent. He also anticipates that rising menu prices will begin impacting consumer restaurant spending, calling it a “simple supply and demand equation.”
However, consumers may keep going to restaurants because of what’s happening at other food and drink sources. Grocery prices rose 12.2 percent in June year-over-year, the biggest 12-month leap since the period ending April 1979. The index for butter and margarine increased 26.3 percent, while fruits and vegetables bumped 8.1 percent and cereals and baked goods lifted 13.8 percent.
