Inflation Finally Catches Up to Restaurant Prices

It’s a blow to the restaurant industry, which had offered relatively stable prices while groceries skyrocketed.

April 14, 2023

For the first time since inflation began accelerating in mid-2021, restaurant prices outpaced grocery prices on a 12-month basis, according to the Labor Department.

The price of food at home is up 8.4% in the last 12 months but fell 0.3% from February. The price of eggs fell 10.9% in March from the prior month, while the fruits and vegetable index dropped 1.3%, reports CNBC. The food-at-home index fell for the first time since September 2020.

The cost of eating away from home was up 8.8% over the 12-month period. For the third consecutive report, the price of food away from home rose 0.6% month-over-month.

Food-away-from-home prices were the third biggest contributor to monthly inflation, behind transportation services (up 13.9%) and electricity (up 10.2%). Broken down by segment, limited-service menu prices are 7.9% higher year-over-year (0.5% month-over-month), while full-service prices are 8% higher versus March 2022 (0.7% month-over-month), according to Nation’s Restaurant News, which notes that “restaurants have tracked lower than food-at-home prices for over a year, which has made them an attractive wallet share option for many inflation-weary consumers.”

Some of the food-away-from-home price increase was due to the end of free school lunch programs. According to the National Restaurant Association, the price index for food at employee sites and schools increased by 131%.

However, the impact of inflation is seen in the types of foods consumers are getting at restaurants. Quick-service restaurants enjoyed a 3% traffic uptick in Q1, for instance, while visits to full-service concepts dropped by 2% year-over-year. Further, lower-check breakfast and morning snack dayparts have fully recovered from pandemic losses, according to Circana, while higher-check full-service dinner visits declined by 13% year-over-year.

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