Restaurant Inflation: You Can’t Save Your Way to Success

Restaurant Inflation: You Can't Save Your Way to Success

by Aaron Allen
Restaurant Consultant, Speaker & Industry Analyst
Aaron Allen & Associates

Restaurant inflation certainly been a challenge on margins over the last few years – even more so than usual. The pressure on profitability is certainly not new. Already in 2019, restaurants were not able to pass inflationary costs on to consumers (back then, the average restaurant price increase was 3.1% while labor cost was growing at 3.8% and food at 5.0%).

As of May 2022, the YOY growth in restaurant prices reached a record 7.4%, but labor costs grew by 10.1% and food costs by 10.6% (measured by a producer food wholesaling index). Supply chain challenges and the growth in global commodities prices do not seem to forecast a slowdown in the short term, either.

And restaurants’ labor cost increases are not going away either (in the U.S., restaurant hourly wages increased an average of 12.5% in 2022 in only four months) while restaurant inflation (menu price increases) averaged 6.8%.

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