Food Inflation Relief

by | Apr 10, 2024 | blog, Business, Industry News, operations, seasonal menu, Special menu, Trends | 0 comments

Consumers and businesses alike have been hit hard with inflation. It especially takes a toll on hospitality and customer service establishments like restaurants, with increased costs in operations and a decrease in consumer spending. 

Thankfully, according to this recent Nation’s Restaurant News (NRN) piece, the Consumer Price Index for February showed “that the food index remained unchanged in February, with food-at-home prices flat and food-away-from-home prices up 0.1%. The food-away-from-home index – counting both limited-service and full-service restaurant prices – was the lowest its been in about two years. In January, food-away-from-home prices were up 0.5%, while in the previous months they were up 0.3% and 0.4%, respectively.” This could represent a slight “cooling off” in restaurant- and food-related inflation, easing pressure for businesses and consumers alike.

In fact, the NRN goes on to demonstrate just how pinched consumers are feeling, with inflation impacting both restaurant menu prices as well as grocery costs. “Menu price increases have generated plenty of social media attention from fatigued consumers, who have also pulled back on visits throughout the past several months. Those consumers have likely turned their spending to food-at-home, which has generated lower inflationary levels for 12 straight months.” The difference, however, is not greatly impactful. “Kalinowski Equity Research, the gap between grocery/supermarket inflation and restaurant inflation shrunk in February and is not expected to widen any more this year.”

Though pressure could potentially be easing, business owners will need to remain patient. Growth could be slow. Kalinowski Equity Research CEO/President Mark Kalinowski “expects full-year same-store sales growth to be slower than 2023 numbers,” NRN states. And with changes to minimum wage at QSR restaurants in California rising, effective this month, other states may follow suit, impacting restaurants’ ability to modify menu prices even as inflation lightens. Many chain QSR restaurants, including Shake Shack, McDonald’s, and Chipotle, have released planned pricing increases to accommodate new California laws. 

“Now is the time to continue to review the most important marketing and promotional item every restaurant operation has: the menu,” says Richard Weil, owner and principal of National Restaurant Consultants. “As food inflation may have subsided, almost all other operating costs continue to rise–not just food, but beverages, paper, and labor, utilities, lease rates, cost of capital/borrowing money—the list goes on. Completing a detailed review of your operations menu is necessary and will provide a pathway to improve bottom line results.”

Navigating new regulations and economic uncertainties creates pressure on restauranteurs to make adjustments—to labor, to operations, and to menu pricing, all of which can change the customer experience. Our restaurant consultants have helped restaurant businesses thrive during previous economic challenges, and we can work with your business to prepare for these challenges ahead as well.

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