Casual Dining Discounts Distract from Overall Menu Price Increases

BOSTON (Oct. 22, 2009)—While restaurants are offering a wide variety of deals to gain more traffic, regular menu item prices, especially of alcoholic beverages, have increased.

"We hear a lot about the deals out there because that's what's being advertised," says Leslie Kerr, President of Intellaprice. "Two for $20 dinner deals and discount entrées are memorable, but the reality is there's a whole portfolio of menu items, and restaurants are strategic about managing prices in key categories."

Intellaprice's research focuses on regularly priced items - not those subject to special promotions. The findings indicate that the overall price change vs. 2008 is -.6%. Not exactly deep discounting-and this figure varies by menu category. Kerr notes that the continued economic downturn has impacted trends notably. "This year, food prices overall are down by .6% and bar beverage prices are up nearly 2%. That's compared to our 2008 finding that food prices were up 2% overall and bar beverages were up 5% vs. 2007."

Categories whose average prices actually increased included dinner entrées at 2%, side dishes at 8%, and desserts at 7%. On the flip side, 2 categories were down: appetizers decreased 2%, and add-ons - items like cheese or additional proteins (bacon for example) - are down by 4%. "If you are a meat and potatoes eater, who also likes dessert, chances are you could feel the sting," said Kerr.
"But if you stick to the promoted deals, or if you tend to make appetizers your meal, then you're more likely to save some money."

Kerr explained that it's an age-old game of pricing management in hopes of driving profitability. "Restaurants feel pressure to take price increases somewhere; it seems as though they're trying to ease sticker shock for more noticeable, popular items, and increasing prices in less noticeable places on the menu."

2009 marks Intellaprice's third annual analysis of pricing trends in the casual dining segment. The study covers top casual dining chains in 21 markets nationwide. Nearly 2,900 beverages and 13,000 food prices are included in the sample.

Other findings show that among chains surveyed, Atlanta boasts the most expensive dinner entrees, averaging $14.75, outpacing the New York, Chicago, and Los Angeles metro areas.


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