US menu price inflation now outpaces wage growth
Food-away-from-home prices rose 3.5% in September while pay grew just 3%, federal data show — even as quick-service traffic fell 2.6% in the third quarter.
US menu price inflation is outpacing wage growth, with food-away-from-home costs up 3.5% year-on-year in September against pay growth of just 3%, according to federal data released this month.
Limited-service menu prices rose 3.2% over the year; full-service rose 3.8%. Food-at-home prices — the supermarket aisle — were flat month-on-month and up only 2.5% year-on-year, Nation's Restaurant News reported, citing US Bureau of Labor Statistics figures. Overall consumer prices rose 0.6% for the month and 3.7% for the year.
Menu price inflation outpaces pay
Sales held up because the average check did, not because more people walked in.
Hourly wages grew 3% over the same 12 months, per the Bureau of Labor Statistics. Set against menu price inflation of 3.5%, that gap works out, by Nation's Restaurant News' own calculation, to a 0.7% fall in consumer spending power over the year. Stocks fell more than 1% the day the inflation data came out, extending a gap AMUSE has tracked since late summer.
Consumer mood has moved with the numbers. The University of Michigan's consumer sentiment index fell 13.6% year-on-year in October, even as quick-service sales rose 0.6% in the third quarter. Visits to those same restaurants fell 2.6% in the quarter, according to Revenue Management Solutions — sales held up because the average check did, not because more people walked in.
Restaurants are not pricing in a vacuum, though. The National Restaurant Association's chief economist, Chad Moutray, said in the trade group's February State of the Restaurant Industry report that operators remain "laser-focused on controlling costs while delivering value," after a year in which 42% of operators said their restaurant made no profit.
An industry's own math problem
Moutray framed this year's challenge for operators as getting "the math right" — covering food and labour costs that have risen well ahead of pre-pandemic levels without pricing out diners who are already visiting less. Full-service menus, up 3.8%, are doing more of that work than limited-service, up 3.2%.
The next Bureau of Labor Statistics inflation release lands in mid-November. Nothing in September's numbers suggests the gap between menu prices and pay packets is about to close.
