Listen to the article 2 min

This audio is auto-generated. Please let us know if you have feedback.

Dive Brief:

• Food-away-from-home prices rose 3.5% in May, down from a high of 4% in January, according to Consumer Price Index data.
• Food-away-from-home prices are trending below overall inflation, however, which reached a three-year high of 4.2% in May. The last time inflation was at or above 4% was May 2023.
• Major menu items, ranging from coffee and beer to burgers, burritos and wings, all saw prices grow by single-digit percentages in May, according to Toast’s May Menu Price Monitor.

Dive Insight:

While menu prices remain below inflation, rising consumer prices could impact consumer spending habits that have already been in flux for at least two years. 

Restaurants have responded by improving their overall guest experiences and offering value deals to boost traffic. Restaurants could see a bump in traffic over the summer with the World Cup starting on Thursday, especially since the tournament is based in North America this year. 

However, restaurants will continue to face rising prices for ingredients. Coffee is seeing an impact from bad weather, with prices up 6.9% in May, the highest increase of any food item monitored by Toast. Extreme droughts and flooding have strained coffee production over the past few years as demand has grown, Toast said. 

Beef prices were up by 7% in May, according to the U.S. Bureau of Labor Statistics, but burger prices were up by 2.4%, per Toast’s data. Burger prices have largely not kept up with the price of inflation, but ongoing increases suggest that restaurants are raising menu prices to offset increased costs, Toast said. However, there is growing concern over an uptick in screwworm cases that are hitting local cattle herds that could impact beef prices.

Burritos and wings prices were also up year over year, but by only 1.6% and 1.1%, respectively. Even though hot dog prices increased about 2.5%, prices have steadily declined since the start of the year. Hot dogs are typically composed of cheaper cuts of beef, chicken and pork, Toast said.