Restaurant menu prices rose 7.6% in July year-over-year, a slight deceleration from June’s 40-year high.
Prices for full-service meals increased by 8.9%, while prices for quick-service menus increased by 7.2%. This was a slight improvement from last month, when industry menu prices rose 7.7%, the largest 12-month increase since the period ending November 1981. Still in June, casual dining prices increased 8.9% and quick service prices increased 7.4%. .
Headline inflation in the United States was 8.5% in July. This was less than expected, mainly due to lower gasoline prices. In comparison, in June inflation rose 9.1%, beating the Dow Jones estimate of 8.8%.
Here’s how menu prices have stacked up over the past few months. The index of food consumed outside the home increased every month except July:
- Index of food away from home: 6.4%
- Quick service menu price: 8%
- Full-service menu price: 7.1%
- Food outside the home index: 6.8%
- Quick service menu price: 8%
- Full-service menu price: 7.5%
- Food outside the home index: 6.9%
- Quick service menu price: 7.2%
- Full-service menu price: 8%
- Food outside the home index: 7.2%
- Quick service menu price: 7%
- Full-service menu price: 8.7%
- Food outside the home index: 7.4%
- Quick service menu price: 7.3%
- Full-service menu price: 9%
- Index of food away from home: 7.7%
- Quick service menu price: 7.4%
- Full-service menu price: 8.9%
The inflationary trend is in line with what many public chains have reported – same-store sales are up well in April and May, but soft in June. Sweetgreen, which was forced to lay off 5% of its staff and move to a smaller headquarters, said comps started to slow around Memorial Day and still haven’t regained their previous trajectory. The fast casual responded by lowering its revenue forecast for 2022 and offering a conservative estimate.
“In Sweetgreen’s 15 year sales history, we have never seen this before. Our historical seasonality has consistently shown growth over this period,” Chief Financial Officer Mitch Reback told analysts earlier this week.
Several brands have noticed low-end consumers tightening their wallets, pushing them to focus on value. Wingstop believes it is in a better position than others because it can pass on the deceleration in bone-in wing prices. In the second quarter, the fast casual launched a $15.99 boneless meal deal — 20 boneless wings, four flavors, two dips, and a large fry — that mixes 7%. The company is also rolling out its chicken sandwich nationwide in September at $5.49 a la carte and $7.99 for a combo.
McDonald’s CEO Chris Kempczinski told analysts the hamburger giant would be a net beneficiary as consumers move away from casual dining and fast food chains. John Peyton, CEO of Dine Brands, the parent company of Applebee and IHOP, feels the same way, and he has the numbers to back it up. According to the company’s data, while customers with household incomes below $50,000 slightly decreased their visits, those with household incomes above $75,000 increased their frequency by 6 to 8 points. percentage.
“Which suggests to us that customers who often dine at more expensive restaurants find Applebee’s and IHOP because of their well-known value position, which is why we’re doing well in difficult times like this,” said said Peyton. “And we actually performed well during the 2008 and 2009 recession compared to our peers. With regard to check management, the average check remained stable throughout the two quarters. And so, we don’t yet see evidence of significant management of checks once they’re in the restaurant.
Kempczinski also noted that McDonald’s will thrive due to the glaring discrepancy between restaurant and grocery store prices. The take-home food index has climbed 13.1% in the past 12 months, the largest annual increase since the period ending in March 1979. The price of cereals and baked goods rose 15 % during the year, fruits and vegetables increased by 9.3%, and dairy and related products increased by 14.9%.