In times of financial uncertainty, the restaurant industry will tightly compete with grocery stores. As consumers look to shrink their budgets and rein in spending, dining out, even at QSR establishments, moves into the “luxury” category. Keeping an eye on grocery prices and other inflation categories makes for smart preparation when it comes to consumer spending habits and foodservice operators to consider pricing changes..
According to the Consumer Price Index in January, reported Restaurant 365, “December indicated that prices for food-at-home (groceries and supermarkets) rose by 1.8%, up 20 basis points from November’s increase of 1.6%.”
Joe Hannon, general manager for inventory and purchasing at Restaurant365, the consultancy, added, “The CPI report brought some tough, though expected news — inflation ticked up, adding pressure on both businesses and families during and following the holiday season.”
Many product prices have been impacted by this inflation uptick; the most obvious, of course, is eggs. The supply is incredibly low, with entire cold cases sitting completely empty where the eggs should be.
Retail egg prices increased by 8.4% in December and continue to experience volatile month-to-month changes, the USDA said in its 2025 Food Price Outlook, also released in January.
Nation’s Restaurant News (NRN) shared news from MarginEdge, a management software company for restaurants. “MarginEdge noted that the national price of eggs was an average $6.31 a dozen on Jan. 13. Regional differences were marked. A dozen eggs in the Midwest was $5.81 on Jan. 13, compared to $6.19 in the South, $6.35 in the Northeast, and $7.31 in the West – a full dollar more a dozen than the national average.”
NRN added that “egg prices in December 2024 were 36.8% higher than in December 2023 but still below peak prices in January 2023. Egg prices are predicted to increase 20.3% in 2025.”
The Avian Flu impact on egg supply will also effect restaurants, especially breakfast locations, and managers should take into account how they will adjust menu offerings and prices to accommodate a lower egg supply.
Richard Weil, owner and principal of National Restaurant Consultants weighs in regarding other commodities. “As of this blog, several other commodity markets worth noting that continue to drive inflation: cocoa, gold, and cheese markets remain high. Beef is the one commodity on the protein front that had been high and is showing some signs of slowing down.”
Our restaurant consultants are experts on menu engineering, which specifically accounts for these necessary menu adjustments in a way that benefits the bottom line without driving away restaurant guests.