Restaurant menu price inflation eased last month

Prices at fast-food and casual-dining restaurants slowed as costs eased and concern mounted about slow industry traffic.
restaurant menu prices
Restaurants slowed their price increases in February. | Photo: Shutterstock.

Restaurants slowed their pricing roll last month as their own costs slowed and concern about traffic mounted.

Food away from home prices increased 0.1% in February, the U.S. Bureau of Labor Statistics said on Tuesday, effectively ending a run of higher-than-typical menu price increases that have lasted for more than two years.

Prices at limited-service and full-service restaurants each increased 0.1% in February.

By comparison, the consumer price index increased 0.4% in February.

That said, restaurant price inflation is still rising faster than grocery price inflation, particularly when measured over the past year.

Food away from home prices are up 4.5% over the past year, compared with 3.2% for inflation overall and 1% for food at home prices, which were flat last month.

Full-service restaurants have kept their price increases more measured over the past year, up 3.8%. But prices at fast-food restaurants are up 5.2% over that time.

Most restaurants are expected to keep price hikes to a minimum this year, largely because their own costs have eased. Labor cost inflation has slowed, as have food costs.

To be sure, there are some clear exceptions. Companies that sell a lot of beef are more pressured, given inflation for that protein, while fast-food restaurants face the prospect of a 25% increase in the minimum wage in California.

But, for the most part, brands are focusing more on traffic. Offers and discounts are increasing in their prevalence. Wendy’s, recovering from a backlash over “dynamic pricing” comments, is offering deals this month on its Dave’s Single and Dave’s Double burgers.

Concern about restaurant prices has only increased in recent months amid social media backlash against prices at places like McDonald’s and Five Guys.

The prices have caused traffic problems for many chains, as most companies are seeing declines in customer count.

Lower-income consumers, for whom inflation has been a bigger burden, have cut back on their visits to restaurants in the past two years, according to data from Restaurant Business sister company Technomic.

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