Restaurant Prices Climbed Even More Than Grocery Costs In The Past Year
Inflation began its (most recent) dizzying climb in mid-2021, but as modern consumers know all too well, that was only the beginning of the story. The food-at-home index has consistently seen a 0.6% month-over-month increase since the beginning of 2023 alone, reports CNBC. Not only are foodies skipping out on restaurants, but according to a Tasting Table Exclusive survey, nearly 50% of respondents say they aren't even buying steak to prepare at home anymore. Luckily, in recent months, the break-neck speed at which inflation has been rising is beginning to cool. The price of staples like chicken, dairy, and grain has been slowly but surely deflating, and wholesale egg prices have slowly been beginning to lower after "Eggflation." Still, while some retailers have announced plans to stop increasing prices or to slow the increase, nobody has mentioned bringing prices down.
The current rate of food inflation is at 5% which, while obviously still not ideal, is a welcome breather from the record-high 9.1% U.S. consumers saw last summer. The Consumer Price Index rose 0.4% in February 2023, then only rose by 0.1% in March. But restaurant prices increased even more than grocery prices in 2022, and consumers are feeling the heat from both ends of the spectrum. According to the U.S. Bureau of Labor Statistics, as of April 12, 2023, "food at home" costs are now 8.4% higher than this time last year. "Food away from home" costs are now at 8.8%.
A positive outlook for the restaurant industry, but not so much for consumers
It's no secret that the last few years have been an eighth circle of hell for the restaurant industry. When consumers' disposable income gets hit, special occasion treats (like restaurant visits) are among the first things to get axed especially fine dining establishments, which many workers rely on for employment. Per a recent report by the National Restaurant Association, 92% of restaurant operators said rising food costs were a serious threat to their business. Last month, CNN reported that grocery prices rose by 11.3% from January 2022 to January 2023, and they aren't likely to fall any time soon. As a result, at least 15% of restaurants reported adding a built-in surcharge to customer bills, which might offset the financial hit for businesses but makes the basic human need of eating even more expensive for consumers. Still, it looks like restaurants are returning to their pre-pandemic figures.
In February 2023, the National Restaurant Association's State of the Restaurant Industry report said that many restaurants across the country are settling into a "new normal." Looking forward, the industry is expecting significant sales growth in 2023 spearheaded by higher menu prices. Per the report, it looks like restaurants are getting comfortable charging more, and consumers are relenting and paying up.
Consumer implications looking forward
Alas, economic struggles and limitations to food access in America may be exacerbated by rising prices. As Senator Sanders recently noted during Senate hearings, 60% of Americans are currently living paycheck-to-paycheck. Per NPR, 70% of consumers say the sting of food inflation is hitting them harder in March 2023 than it was in November 2022, and nearly 20% of U.S. consumers have reported skipping meals altogether. For many, pricey groceries are becoming an issue of food insecurity. So, looking forward, is it more economical for foodies to find budget options for eating out, or to brave the labyrinthian jungle of the grocery store?
Experts expect food prices to slow in 2023 compared to 2022, but they're still going to keep increasing. The USDA predicts food-at-home costs to rise another 7.8% by the end of 2023, and food-away-from-home prices to jump a further 8.3% before this economic fiasco is over (if it ever ends).