Halfway into a challenging year marked by rising commodity costs, menu pricing is expected to emerge as a key issue for restaurant chains as they struggle to drive customers through their doors.
The need for pricing to address soaring commodity inflation has been a common theme in earnings reports all year, and many in the restaurant world have raised prices to some degree in various ways —some for the first time in years. Others have price hikes scheduled for the second half of the year.
The recent round of earnings calls has offered some insight into pricing.
Many chains, such as McDonald’s, Starbucks, Chipotle Mexican Grill, Texas Roadhouse and Panera Bread, have boasted positive sales trends that included menu price hikes with no impact on guest behavior.
Others, however, such as P.F. Chang’s China Bistro, Ruby Tuesday and IHOP, say they are rethinking their strategies on pricing and perceived value after seeing guests turn away in droves.
When asked why some brands are seeing better consumer acceptance of higher prices than others, analyst Bart Glenn of D.A. Davidson Research said it all comes down to consumer perception of value, not who has the lowest prices.
