Prices consumers paid for food away from home (meals from restaurants) increased 8.5 percent year-over-year in November, according to the final Consumer Price Index (CPI) report of 2022. The data remains almost unchanged to the prior month’s 8.6 percent index.
Limited-service CPI (fast-casual, QSR) crept up to 6.7 percent, while full-service dining inflation rose 9 percent over that same period.
In addition, the food-at-home (groceries) index was up by 12 percent year-over-year in November, up 5 percent that month alone, led by a whopping 8.9 percent jump in the price of lettuce.
Between supply chain constraints, increased operating costs, wage growth and transportation, restaurants continue to face challenges amid the COVID-19 endemic. While demand is high, some struggle to gain enough workers to keep up with consumers.
Full-service restaurants took the brunt of pandemic-related challenges, such as dining room closures, limited capacity mandates and labor shortages. All of these factors combined keep full-service dining inflation elevated, as seen with higher menu prices.
However, limited-service restaurants dropping below 7 percent—for the first time since 2021, could be attributed to the ease of gas prices, and the growth of discounts, loyalty and reward programs at QSR and fast-casual establishments.
Looking ahead, it’s vital full-service and limited-service restaurants take the time to understand their store saturation and scarcity level to find what pricing power is left.
As full-service dining also offers off-premises pickup and delivery options with third-party providers, fast-casual restaurants, in particular, should look beyond their own category for strategies when measuring competitive positions and pricing going into the new year.
In the recent Food Price Outlook report, the USDA said it expects food prices to grow more slowly in 2023 than in 2022. It projects food-away-from-home prices to increase by 4 to 5 percent.