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Groceries Gap May Mean Menu Price Increases

by | Sep 20, 2022 | blog, Business, Industry News, National Restaurant Consultants, Tips | 0 comments

A few weeks ago, we shared the rise in grocery store prices and how that affects both the consumer and the restaurant industry. Nation’s Restaurant News (NRN) reported last week that the “restaurant gap with grocery prices remains wide” through the end of last month. Inflation continues to affect the consumer—and where they choose to spend their money.

The NRN article details the situation. “The price gap between restaurants and retail groceries remained at 5.5 percentage points in August, tying the July chasm, which was the largest in favor of restaurants in 40 years, according to the August consumer price index. U.S. overall inflation rose 0.1% in August, posting an 8.3% annual rate, according to the Bureau of Labor Statistics report.” This is the largest “food-at-home index…increase since the period ending March 1979.”

While the rise in grocery costs may drive consumers to restaurants in some instances, the inflation takes a toll on the industry’s menu prices. “Menu pricing seems poised to remain elevated well above historical averages for the next several months,” says Mark Kalinowski, president, and CEO of New Jersey-based Kalinowski Equity Research LLC.

At National Restaurant Consultants, our business analysis processes always include a review of menu design and pricing. Our consultants know that making menu adjustment can have a great effect on sales and profits. 

The indicators that NRN refers to may be the prelude to a price increase, but there are other factors. Look at your competition, as well as your own market and submarkets. National Restaurant Consultants owner and principal Richard Weil says, “The first priority is taking time to communicate with all your staff to be sure they understand any increases and have the language to converse with your guests.”

To learn more about our menu engineering services and what they can do for you by schedule a free consultation.