Rising Food Prices Affect Dining Out
Food prices are climbing across the country, extending beyond grocery store shelves.
In January, the U.S. Bureau of Labor Statistics published its latest Consumer Price Index (CPI) report, which provides a monthly glimpse into inflation trends.
The CPI indicated that, in December, restaurant prices spiked by 0.6% to 0.8% compared to November.
Furthermore, the out-of-home food index also saw an uptick of 0.7% in December. The index for full-service meals was up by 0.8%, while limited-service meals experienced a rise of 0.6%.
As families ponder their restaurant spending, Fox News Digital consulted with two experts to gain insight.
Jeff Hubler, who manages Steep Lavigne Brewing Company in Highland Park, Illinois, noted that despite his establishment being among the more budget-friendly options, prices are still on the rise.
“Pre-COVID, a family of four could dine for about $48—not including drinks, tax, or tip,” he recalled. “Now, that same meal is roughly $62, drinks included.” Hubler pointed to lasting inflation effects from the pandemic along with significant wage increases.
Consumers are “spending less than a year ago.”
“Historically, the restaurant industry operates on thin margins. Like many sectors, we’ve been reluctant to pass along higher costs,” Hubler explained. “In the past four years, we’ve absorbed much of these cost hikes ourselves. Labor costs have surged too, with certain positions seeing wage increases of up to 50%.”
Chad Mautray, chief economist at the National Restaurant Association, mentioned that menu prices are climbing mainly due to increased operating costs, while consumer spending has become more cautious.
“Looking ahead, full-service restaurants will likely see a median return on sales of just 2.8% in 2024, compared to 4.0% for limited-service venues,” he said. “Both numbers are significantly below pre-pandemic levels, illustrating the ongoing pressure these establishments face while juggling cost increases and gradual price adjustments.”
On a related note, Beau Bryant, a restaurateur known as the “Restaurant Giant,” remarked that many in the industry are trying to manage increasing costs efficiently. He acknowledged that restaurant managers are conscious of “menu price fatigue” among consumers.
“Many operators face a tough choice: either they can’t raise prices enough to stay profitable or they have to compromise on quality,” he reflected.
Despite the rising prices, Bryant observed that restaurant traffic remains solid; however, consumers are “spending less than they did last year.” They still prefer dining out over takeout, yet are cutting back on extras like appetizers and expensive entrees.
It’s challenging to pin down an average dining cost for families, as it varies widely by state. Bryant noted that while there are signs of improving consumer confidence, the overall outlook for the casual dining sector appears promising.
“We are optimistic about potential improvements in the dining scene this year,” he concluded.
