Customer Costs for Menu Items Jumps

Blame it on worker shortages and higher prices for food and fuel.

June 02, 2021

Chefs in a Restaurant Kitchen

ALEXANDRIA, Va.—Some foodservice operators around the country are raising the prices of menu items, reports They point to the severe shortage of workers, as well as limited supplies for menu items for the pricing pressure.

As restaurants have reopened, operators have struggled to attract employees. Many job applicants are demanding higher wages, and some employers are passing the cost of these wages onto customers. According to the May 10 NACS Daily, Lyle Beckwith, senior vice president of government relations penned an op-ed in the Washington Times noting that the U.S. economy is in an odd situation.

“While nearly 10 million people are looking for work, businesses from across the country and in a variety of industry sectors report a shortage of willing workers,” Beckwith wrote. “Normally, people who want work and businesses who want workers find one another, but that is not happening now.”

He added that “some sectors are having more trouble than others, like in-person service and hospitality sectors that include restaurants and convenience stores.”

In addition to concerns about contracting COVID-19, employees may be less likely to seek employment because of federal economic incentives. “Many unemployed people may be receiving nearly as much (or, in some cases, more) for not working than they would working. While that might not last forever, it may be keeping some people home for now,” said Beckwith.

Alan Natkiel, owner of Georgia's Northside, a BBQ restaurant in New Hampshire, reported that the cost of St. Louis Ribs was up 50%. "During the last couple of months, I'm seeing price increases that are staggering," he said. "Some items that I purchase every single week have doubled and even tripled since the beginning of the pandemic.”

Consumer prices have risen 4.2% across all items over the past year. That’s the largest 12-month inflation since 2008, according to the Bureau of Labor Statistics. But that figure was measured from low levels of inflation in April 2020 when the pandemic began. In addition, the general food index has gone up 2.4% over the past 12 months.

Beef prices also jumped by an average 5% average from April to March, and a shortage of chicken wings has forced restaurants to increase prices. NACS Daily reported last month that chicken was in big demand but in short supply. Companies are struggling to hire people to process chicken, even as the popularity of chicken soars.

In addition, gas prices have surged 47.9%, according to the BLS, a problem that escalated with May’s technology hack of the Colonial Pipeline system and the resulting temporary fuel shortage, which has helped boost delivery costs nationwide.