More than 90 percent of restaurant chains plan to increase menu prices this year to offset higher food costs, but price hikes will remain minimal despite an expected rise in health care and labor costs, according to a report from supply chain co-op SpenDifference LLC.

Ninety-two percent of restaurant chains responding to a survey last month said they plan to increase prices in 2014, an increase from the 83 percent who said they increased prices in 2013.

This year’s increases are expected to average 1.8 percent, compared with 1.65 percent in 2013, according to the survey of chains by Denver-based SpenDifference, which offers purchasing support to about 20 national and regional restaurant companies across the country.

The 48 chains responding said they expect food costs to rise 1.7 percent on average, the survey said.

Maryanne Rose, SpenDifference’s chief executive, said chains are planning price hikes based on inflation, though other costs are expected to increase this year.

“Operators are mimicking what is happening with inflation,” she said. “Their menu price hikes are only covering their increased food costs without taking into account potentially higher health care and labor costs.”

About one-third of respondents said they plan to increase menu prices at least 2 percent in 2014, but even that will allow for little cushion, said Rose.

SpenDifference projects that food costs will rise 2 percent this year on average.

“This survey shows they are using price to cover higher costs while finding other ways to better manage their margins,” Rose said.

To counter rising food costs, two-thirds of respondents said they are renegotiating contracts with suppliers, for example, while more than half said they are promoting items with lower food costs and developing limited-time offers with less expensive ingredients.

Last year, 47 percent of those surveyed increased prices across the board. About 28 percent of respondents said they raised prices on burgers and sandwiches, and just under 25 percent increased the price on soups and salads. Only one in five increased entrée prices, with many instead reducing portion sizes to keep prices down.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout