Restaurant prices rose faster than grocery prices in March

For the first time since inflation began to accelerate in mid-2021, restaurant prices are higher than grocery prices on a 12-month basis, according to the report. Labor department.

It’s a blow to the restaurant industry, which has seen visitor numbers lagging as budget-conscious consumers cut back. For months, restaurant CEOs liked Cheesecake Factory Matthew Clark and by Wendy Todd Penegor has touted their meal as a bargain relative to eating at home, based on consumer price index data.

Food prices in March rose 8.5% over the past 12 months, as the cost of dining away from home skyrocketed, up 8.8% in that period. For the third consecutive report, food prices away from home rose 0.6 percent month-on-month.

National Restaurant Association chief economist, Bruce Grindy, attributed to increase food prices at schools as free lunch programs are instituted in time Covid pandemic expired.

“As a result, this price index has surged in recent months, which is putting pressure on the overall food index away from home,” he wrote in a blog post Wednesday, adding: adds that it is expected to further distort the overall food index. – away from home index until the fourth quarter.

The price of food at home has increased by 8.4% in the past 12 months and is in fact down 0.3% from February. Egg prices fell 10.9% in March from the previous month, while the fruit and vegetable index fell 1.3%.

For months, grocery stores have put pressure asking food and beverage manufacturers to offer discounts as shoppers deal with sticker shock, switch to private label brands and put fewer items in their cart. Several vendors listened as their volumes dropped: Brand Conagra And PepsiCo said they won’t raise prices anymore this year, while Old Bay spice owner McCormick said it is trying to raise prices but is facing resistance from retailers.

overall Consumer price index has increased by 5% in the past 12 months as inflation continues to cool. This was lower than expectations for a 5.1% increase. Similarly, many restaurant companies also report that inflation is moderate, although food, labor and construction costs remain high.

Olive Garden’s parent company, Darden restaurantfor example, said in March that chicken, dairy and cereal prices remained high in the third fiscal quarter, although they have improved steadily. Darden is forecasting low single-digit inflation for their ingredients for fiscal 2024. The restaurant company has kept its menu price increases below the inflation rate to attract customers and gain market share.

But instead, most restaurants chose to raise prices to avoid a squeeze on profits. As a result, consumers have cut back on restaurant visits or spent less money when they go out to dinner.

Restaurant industry tracker Black Box Intelligence reported that the industry saw traffic growth in just two months – January and February – compared to last year. Those two months passed the omicron last year Covid outbreak, leading to a sharp drop in restaurant sales and traffic in early 2022.