Most Americans say restaurants are getting too expensive, and they’re not imagining things.
“Following seven consecutive months of solid gains,” the National Restaurant Association noted, prices rose slightly in September, and now “menu prices have risen 3.7% since September 2024.”
At full-service, sit-down restaurants, the hike is even higher, up 4.2% year-over-year, according to the Bureau of Labor Statistics.
That is much higher than the overall year-over-year inflation rate of 3.0%. Meanwhile, grocery store prices have risen only 2.7% in the same period.
This dynamic, restaurant prices increasing faster than the consumer price index or grocery prices, has been going on for 2 1/2 years — since March 2023.
Restaurateurs are not becoming greedier, nor are they reacting to a massive increase in demand for fish and chips. Their costs are going up, especially energy costs, and these price hikes are an effort to keep their heads above water.
Surging prices without a surge in demand risk scaring away customers, and industry experts see that happening.
“Among the diners cutting costs,” RestaurantDive.com reported, “60% said they are choosing cheaper restaurants while 53% said they are using discounts or coupons, and 51% are ordering fewer items.”
Some restaurants are getting desperate. Olive Garden reintroduced its bottomless bowl of pasta for $13.99.
When Olive Garden returns to 2022 all-you-can-eat prices, you know the industry is in trouble. Wall Street is noticing.
“We have also grown more cautious” about restaurants, Bank of America noted in an analysis, pointing to “the widening of macro pressures beyond the low-income cohort that had previously been the primary source of pressure.”
Translated: The U.S. middle class is starting to balk at a $30 night on the town.
What will this mean for American life?
Reservations should be easier to get, until your favorite place goes out of business. The current price pressure will likely mean places staying closed until happy hour. Don’t be surprised to see some cut-throat competition on Main Street, as the gastropubs fight to be the last man standing.
STOP GIVING CREDIBILITY TO THESE GAMBLING APPS
If Main Street has only one sit-down joint, and if the clientele isn’t rich, it may soon be shuttered.
The economy is a fickle business partner in capitalist America. Sometimes you get rich, sometimes you go poor. Sometimes you get unlimited rigatoni.
