Regular readers of this blog know that consumers paid higher prices for everything from cereal to eggs last month, sending retail food price inflation up 0.7% in August and 13.5% year over year, the U.S. Bureau of Labor Statistics.
Last months, 13.5% increase was the highest rate for that number since March 1979, the latest in a string of four-decade highs for retail food price inflation. Prices are up for basically everything. Over the past year, the price for breakfast cereal rose 23% and eggs increased nearly 40%.
Meat prices seem relatively tame by comparison. Meats, poultry and fish prices are up 8.8% over the past year. But poultry prices rose 15.9% as chicken and turkey producers continue working their way through a springtime rash of Bird Flu.
More troubling is the fact that driving much of the increase in grocery prices has been retailers’ own rising costs for labor and food. Wage rates have soared amid historic shortages of labor, while those same labor concerns have helped drive up the cost of many food products. The war in Ukraine and other issues, such as a shortage of truck drivers, have also contributed to the problem.
Overall, food costs for consumers rose 11.4% over the past 12 months in August, the highest rate since 1979.
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Much of that acceleration is due to sharply higher prices at school lunch programs, where many states ended free meals to students. Prices at schools and employee sites are up 23.7% over the past year.
But both full-service and limited-service restaurants continue to raise prices. Full-service restaurants increased prices 0.8% last month, higher than the 0.6% increase the month before. Limited-service restaurants increased prices 0.7%, down from the 0.8% they increased prices in July.
For the full year, full-service restaurants have increased menu prices 9%. Limited-service restaurants increased charges 7.2%. Overall, inflation rose 0.1% in August. But on an annual basis, the consumer price index slowed to 8.3% from 8.5% the previous month. Lower gas prices drove much of that slowdown.
According to a new report titled TouchBistro 2022 Diner Trends Report fund:
1. Of the 2,600 diners surveyed for the report, 68% rank food quality as the most important factor when deciding where to dine. Location, customer service and price follow close behind, at 66%, 64% and 62% respectively.
2. Eating at local and independent restaurants is also a priority; 63% of respondents prefer them over chains and franchises.
3. But Gen Z is more likely to be swayed by social media and Instagram influencers; 39% of respondents in this group say they’ve tried a new restaurant based solely on the recommendation of an influencer. While Instagram still reigns supreme, TikTok is on the rise—21% of Gen Zers check out this platform before dining out.
4. Posting a tempting menu online is definitely a plus for all generations, as 84% of diners browse the menu ahead of time and 79% look at a restaurant’s website before they visit.
5. While inflation has jacked up menu prices, higher prices are not necessarily a turnoff. Forty-five percent of Americans say that menu price increases would only somewhat affect their decision to visit a restaurant, suggesting that diners are willing to absorb some price increases to enjoy the food they love.
6. A bad reputation is much more likely to drive a diner away from a restaurant. And 73% of survey respondents would be deterred by a negative health inspection rating.
7. Chains are more likely than independent restaurants to offer loyalty programs, but indies might benefit from this incentive, according to the report. More than three-quarters (86%) of diners showed interest in joining a loyalty program if it provided them with access to discounts and coupons for free items.
Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy. Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook, LinkedIn, or Twitter
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