Dive Brief:
- Food-away-from-home prices rose 8.8% in March compared to 12 months ago, according to Consumer Price Index numbers released Thursday.
- Full-service menu prices were up 8% over the past 2 months while limited service prices jumped 7.9%.
- This marks the first time in several months that menu prices outpaced grocery prices, which were up 8.4% in March compared to 12 months ago. Grocery prices were also down 0.3% in March compared to February. By contrast, menu prices were up 0.6% during this period.
Dive Insight:
Several chains, including Domino’s, McDonald’s, Papa Johns and Starbucks, have hiked menu prices in the single to double digits within the last two years to boost store margins. Chains expect pricing to be in the mid-single digits this year as inflationary conditions have largely eased.
Increased pricing hasn’t had a major impact on consumer behavior, however, some studies find. According to a March William Blair consumer survey, the top reason people are eating less at specific brands is the “lack of new menu items” and “inconvenien[ce]” while the percentage of people citing “financial reasons” declined in March compared to December results.
Low-income households are no exception. Compared to William Blair’s December survey, in which 48% of respondents earning less than $50,000 were eating out less often, only 37% in that income bracket said they were eating out less in March. A majority of consumers (64%) said that they consider restaurants a big part of their lifestyles, according to the National Restaurant Association.
