Skip to footer

Are menu prices rising too quickly?

Menu prices at both fast food and full-service restaurants are increasing faster than overall inflation and grocery prices, which may be prompting more US diners to eat at home. 

|
Outback Steakhouse/PRNewsFoto/File
A bacon cheeseburger from Outback Steakhouse. Menu prices in the US are growing much faster than the price of food in supermarkets, according to the latest Consumer Price Index (CPI).

Is menu-price inflation contributing to stagnant customer traffic? Several top chains have reported small same-store sales increases largely because of higher menu pricing that increases average checks enough to offset slight declines in customer traffic. That’s working now but higher labor costs and greater technology investments may push restaurants to further raise prices in 2016. The strategy could backfire if the gap between supermarket and restaurant prices widens.

For the 12-month period ended in November 2015, the Consumer Price Increase (CPI) released by the Bureau of Labor Statistics this week shows food-at-home prices have risen by just 0.3% while food-away-from-home inflation is 2.7%. Supermarket prices for key items such as ground beef and cheese are down—both declining by 3.3% over the past year—while restaurant prices for cheeseburgers may be up. Consumers can’t help but notice. For the year ended May 2015, NPD Group research found overall restaurant customer traffic showed no growth.

During his Q3 analyst call in October, McDonald’s Corp. CEO Steve Easterbrook said the company keeps an eye on food-away-from-home inflation. “Our U.S. third quarter pricing year-over-year was up about 2%, which remains below food-away-from-home inflation of around 3%. The current projected increase in food away from home inflation for the full year remains at 2% to 3%,” Easterbrook said. But what about at-home inflation?

Quick-service restaurant pricing is up 2.7% over the past year, compared with 2.4% inflation at full-service restaurants. For food trucks and vending, pricing is up 2.2%. The greatest price inflation comes in employee on-site feeding and schools: that category is up 4.9% over the past year.

Few consumer-expenditure categories have seen price inflation equaling or exceeding that for restaurants. Transportation is flat; energy is down 14.7%; apparel prices are off 0.3%. Prescription drugs at +3.4% are one of the few categories with higher inflation.

Eggs prices have been the focus of much discussion this year and, indeed, the category rose 23.7% in the past year. But consumers are paying less at the supermarket for meat (down 2.1%), chicken (down 1.7%), pork (down 6.6%) and fish/seafood (down 3.1%). Fruits and vegetables are up (1.4%) as are bacon (0.6%), hot dogs (6.8%) and some others, but overall food-way-from-home inflation is nine times that for food-at-home. That’s the important number.

This article first appeared in BurgerBusiness.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Are menu prices rising too quickly?
Read this article in
https://www.csmonitor.com/Business/The-Bite/2015/1216/Are-menu-prices-rising-too-quickly
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe