Restaurant menu prices show signs of easing

Prices at restaurants increased slower than the overall rate of inflation in March. But they still increased faster than they did at the grocery store.
menu prices
Restaurant prices are still rising at a rate faster than grocery stores. | Photo: Shutterstock

The Consumer Price Index increased faster than expected last month. But don’t blame restaurants this time.

Prices at restaurants and other foodservice venues increased 0.3% last month, according to data from the U.S. Bureau of Labor Statistics on Wednesday. That was slightly slower than the 0.4% increase for all items the bureau examines. Economists expected a 0.3% increase, according to Reuters.

But prices at restaurants still increased at a faster rate than they did at grocery stores, where prices were flat for the month.

For the year, food-away-from-home prices increased 4.2%, compared with 1.2% at retailers.

Pricing has become a thorny issue for restaurants, as rising prices have generated concern among consumers. Lower-income consumers in particular can’t eat out as often as they want, cutting back on dining at chains like McDonald’s and Olive Garden.

Teenagers, too, have cut back on overall spending due to inflation.

The result has caused traffic declines as consumers adjust their budgets to account for the higher prices. And there are signs that this is having an impact on sales, too, as same-store sales at publicly traded chains slowed markedly in the back half of 2023.

Still, restaurants are expected to moderate their price increases this year, as labor and food costs have eased, at least outside of California. At full-service restaurants, prices over the past year have increased 3.2%.

Limited-service prices remain higher. They raised pries 0.3% last month and 5% over the past year.

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