The dust has settled on a mostly challenging second quarter, so now’s a good time for a menu inflation pulse check. After all, it’s that relentless menu inflation that has driven many consumers away from restaurants and into their own kitchens.
According to the Bureau of Labor Statistics’ CPI report released Wednesday morning, the food index was up 0.2% in July, matching June’s numbers. The food-at-home index, or grocery/supermarket prices, was up 0.1%, while the food-away-from-home index rose 0.2%. By segment, limited-service meals rose 0.3%, while full-service meals increased 0.1%.
Over the past 12 months, grocery prices are up 1.1%, while food-away-from-home prices are up 4.1%, including 4.3% for limited-service and 3.8% for full-service. That 4.1% increase is far above the 21-year historical average of 3.3%, and it also marks the 17th month in a row in which restaurant prices outpaced the food-at-home index, according to Mark Kalinowski, president and chief executive officer of Kalinowski Equity Research.
Though restaurant prices continued to outpace grocery prices in July, they showed a material deceleration from the preceding two months, in which prices were up 0.4%. Still, the gap between grocery stores and restaurants stayed around 300 basis points in favor of grocery stores, Kalinowski noted, compared to the historical average of about 60 basis points. He expects the gap to shrink, but gradually and perhaps not enough to make a major impact on the remainder of the year. The gap, he added, is similar to the one experienced in 2016, which yielded the lowest same-store sales results from the past seven years with the exception of the COVID year in 2020.
“Restaurant industry same-store sales have slowed in each of the last three quarters,” Kalinowski wrote in a note. “Full-year 2024 same-store sales growth likely will be the lowest – excluding pandemic-impacted 2020 – since 2016’s +1.1% rise in the Kalinowski Restaurant Industry Index.”
In July, the overall Consumer Price Index rose 0.2%, which was in line with expectations, and which pushed the index below 3% (at 2.9%) for the first time since March 2021. It was the fourth month in a row that the inflationary index eased.
Contact Alicia Kelso at [email protected]
