Restaurant menu pricing has downshifted to a more normalized rate of inflation in recent months as more operators grow hopeful that 2025 will be less inflationary than recent years.
That, at least, is the conclusion from the latest Pricing Index from Restaurant Business sister company Technomic. Restaurant chain prices increased 1.41% in the fourth quarter, compared with the third. Prices slowed at all but upscale restaurants, completing a dramatic slowdown in menu price inflation as the year went on.
“The last couple of quarters, we’ve seen most of the chain space revert back to what looks like 2019 pricing actions,” Rich Shank, senior principal with Technomic, said in an interview. Restaurants, he added, “are trying to get back to what feels like a normal state of business.”
Fast-casual restaurant prices increased 0.5% quarter over quarter, as did traditional casual dining. Quick-service restaurant prices increased 0.89% and family-dining chains, or “midscale,” rose 0.8%. In most cases, pricing was close to where it was the previous two quarters, through casual-dining chain prices have slowed dramatically as the year went on.
All sectors finished the year with much lower inflation than they started 2024 with. Casual-dining chains started the year with nearly 4% quarterly menu price inflation, slowing to a half a percent by the end of the year.
The exception was upscale restaurants, which went from a slight pricing decline in the third quarter to an increase of 4% in the fourth, according to Technomic. Those chains may be trying to make up for weak sales, as several upscale concepts have seen sales fall in recent quarters.
“A lot of the brands that we’re tracking have been struggling from a traffic standpoint,” Shank said. “I think they’re trying to make up revenue loss. That sector has had a little bit of a challenge, at least the large chain segment.”
Technomic tracks pricing from the 68 largest restaurant chains in the country in terms of volume and size, so the numbers differ from the federal consumer price index.
Restaurant prices have been closely watched in the past couple of years as consumers have slowed their visits out of frustration over menu price inflation. In addition, situations such as the one in California, which in April last year started requiring fast-food chain restaurants to pay workers at least $20 per hour, prompting price increases.
California chain restaurants took most of their pricing late in 2023 and early in 2024 to prepare for the higher wage rates. The state’s chain restaurants raised prices by 4.4% last quarter, according to Technomic. But it wasn’t the state with the highest rate of inflation. That distinction belonged to Alaska, where prices rose 4.7%.
The state with the lowest price increases last quarter was Nebraska, at 1%, followed by Maine (1.2%) and Minnesota (1.5%).
Still, while operators appear to be betting on a more normal rate of inflation this year, there are some potential landmines. President Trump followed through with his threat to impose 25% tariffs on Canada and Mexico, and 10% on China, which could increase prices for a range of commodities. Limits on immigration, meanwhile, could also drive up labor costs by restricting the pool of workers.
Here’s a look at average costs for certain menu items across all chains, along with a few specific products.
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