Full-service menu prices saw higher year-over-year inflation than quick-service for the second month in a row. Prior to that, it hadn’t happened since March 2020.
The price of full-service meals rose 8.7% in April year-over-year, the segment’s largest increase since 1997, when data was first collected, according to the Bureau. of Labor Statistics.
Overall, the out-of-home food index increased by 7.2%, while the price of quick-service products increased by 7%.
April marked the second month in a row that casual dining saw higher year-over-year inflation than quick service. Prior to that, it hadn’t happened since March 2020.
Here is how inflation has evolved in recent months:
- Index of food away from home: 5.3%
- Quick service menu price: 7.1%
- Full-service menu price: 5.9%
- Index of food away from home: 5.8%
- Quick service menu price: 7.9%
- Full-service menu price: 6%
- Index of food outside the home: 6%
- Fast food menu prices: 8%
- Full-service menu price: 6.6%
- Index of food away from home: 6.4%
- Quick service menu price: 8%
- Full-service menu price: 7.1%
- Index of food away from home: 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%
Restaurants nationwide continue to implement price increases as commodity and labor pressures persist.
At Chili’s in particular, inflation beat expectations in its last fiscal quarter. Food and beverage costs rose 180 basis points, driven by raw material inflation of 11%, while labor was unfavorable by 100 basis points compared to 2021, fueled by inflation wages of 10%.
The full-service giant ended the quarter with prices up 4.6%, and another increase is expected this summer. The chain plans to release a new menu to reduce operational complexity and better mitigate macroeconomic pressures.
“[The menu] has been tested,” said CEO Wyman Roberts. “We are pleased with how we have restructured our platforms to deliver better margins, but also to provide us with greater pricing flexibility across geographies and across various menu items, especially as we begin to see very different commodity prices in various categories.”
First Watch managed to avoid price hikes in 2021, but it started this year with prices down 3.5%, and the chain believes it still has room for maneuver later in the year, if necessary.
Chili’s, First Watch and a number of brands say they have seen no significant impact from customers in response to price increases.
“There really isn’t a single metric that’s a trigger point for us,” said Chris Tomasso, CEO of First Watch, describing how the company balances price and value. “Probably every catering company assesses prices, constantly based on margin, and we certainly look at that very closely. So as we go through the year and look closely at our actual experience and where we have pricing or inflation needs that we’re not compensating for, we’ll constantly review it and reassess it. But we had a really good first quarter, and I can just tell you that we’re constantly looking at that.
The likely reason customers haven’t reacted so strongly is that they are feeling inflation everywhere, including in grocery stores. The home food index rose 10.8% year-over-year, the largest 12-month increase since November 1980. Additionally, the index for meats, poultry, fish and eggs grew 14.3% over the past year, the largest increase in 12 months. increased since the period ending in May 1979.