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Restaurant Menu Prices Continue to Rise as Labor Costs Soar

Posted 06.13.2021

Consumers going out to restaurants are finding higher prices these days as operators charge more for their menu items in a bid to make up for rising labor costs. Menu prices, or food away from home prices, rose 0.6% between April and May, according to the latest consumer price index data from the U.S. Dept. of Labor. Prices at restaurants are up 4% on an annual basis. The rate of menu price inflation was lower than the overall rate of inflation, which was 5% last month on an annual basis. That was the largest 12-month increase since August 2008. Menu prices have been rising since last summer when consumers began flocking to fast-food drive-thrus and ordering delivery and operators paid higher prices for labor and charged consumers accordingly. But for most of that time, it was the limited-service sector leading the charge, as demand for those meals and consumers’ willingness to pay them led to higher charges. Yet prices at full-service restaurants rose 4.1% annually in May, according to the Labor Dept., which said that it was the highest rate of annual growth for that sector since October 2018. The numbers suggest that full-service restaurants are taking their charges higher as operators face higher labor costs as they fill open positions to meet rising demand. Sales at full-service restaurants have largely recovered in the past three months as consumers, with cash to spend, have filled seats at independent eateries and casual dining concepts. All that said, fast-food restaurants continue to push prices higher. Limited-service restaurants have raised their prices by 6.1% over the past year. – Source: Restaurant Business.

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