As the hospitality industry grapples with skyrocketing U.S. inflation rates, which reached a new high of 7% in December 2021, consumers are struggling to keep up, according to as new Yelp Economic Index for the fourth quarter of 2021.
According to the data released this week, review mentions of price increases — including comments like “used to be cheaper” and “more expensive — have grown 29% from the fourth quarter of 2020 to the fourth quarter of 2021. Comments mentioning price jumps grew 49% from a five-year inflationary low in Q2 2020 to the fourth quarter of 2021. But mentions of price inflation have grown significantly from even from before the pandemic understandably stalled economic growth, with pre-2020 price inflation levels remaining pretty stable since 2017.
Over the past two quarters, NRN has reported on multiple companies introducing price hikes to counteract growing labor and supply chain costs, including Jack in the Box and Texas Roadhouse.
But even though customers are complaining about price jumps at their favorite restaurants, that has not slowed down their spending. In fact, according to Yelp, searches for the highest-priced restaurants have increased by 56% in 2021 when compared to pre-pandemic levels, likely at least in part due to pent-up demand from so many people staying at home for a year or more. Simultaneously, searches for lower-priced restaurants have decreased by 24% (for one-dollar sign restaurants) and 8% (for two-dollar sign restaurants).
Additionally, despite the economic troubles experienced across the restaurant industry, new business openings increased by 10% compared with business openings in 2020, understandably since the economy had grinded to a halt during the peak of the pandemic. New restaurant openings hit a peak during summer 2021 before dropping again in the fall.
However, consumers continue to prioritize ordering in over going out to restaurants with a 7% growth of consumer interest in food delivery as compared to 2020, and 107% growth over pre-pandemic levels. When customers do go out, they’re relishing in activities that they would not have been able to do in the era of social distancing, including dinner theater (which grew 97%), buffets (31%), and conveyor belt sushi (55%).
“Overall, 2021 underscored how the pandemic, coupled with supply chain and labor constraints, and pent-up demand, complicate the economic recovery,” Yelp Economic Index report authors Jessica Mouras, Will Langston, and Jenny Kao said in the report. “Business openings inched closer to pre-pandemic levels and vaccinations have played a key role in allowing many to return to in-person activities that were restricted just a year ago.”
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