WASHINGTON —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
New data from the U.S. Department of Labor, released last month, showed that the general Consumer Price Index, or CPI, remained unchanged in April when compared with March, and fell 0.7 percent when compared to April a year earlier. The CPI is a measure of the average change in prices of goods and services purchased by U.S. households. The decline in the CPI has been pegged mostly to reduced energy and gas prices. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
For food at home, which generally equates to grocery store prices, the year-over-year change in prices increased 2.3 percent in April. For food away from home, which generally equates to restaurants, the change in prices rose 4.6 percent in April, compared with a year ago. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
(To view charts featured inthis week's issue, click here.) —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
“The retreat in grocery store price inflation relative to restaurants could represent another headwind for restaurant operators in the current challenging economic environment,” restaurant analyst Jeff Omohundro at Wachovia Capital Markets said in a report. “In our view, the recent reversal in grocery store versus restaurant inflation could enhance consumers’ affordability perception of eating at home versus dining out.” —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
Omohundro said the April CPI report was the first time since February 2007 that results for food-at-home inflation fell “meaningfully below” food-away-from-home inflation. Until April, price inflation for food at home and food away from home had been similar. The growth in the CPI for food at home was 5.7 percent in January, 4.8 percent in February and 4.2 percent in March. The CPI for food away from home was 4.9 percent, 4.8 percent, and 4.6 percent, respectively, Omohundro noted. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
Omohundro added that the last time the CPI for food at home declined on a sequential basis to near current levels was in May 2002, which was followed by a months-long decline in Wachovia’s restaurant stock index. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
While discounting and product giveaways have permeated the restaurant landscape, many restaurants have been forced to raise menu prices to combat slowed guest traffic and rising operating costs. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
Chipotle Mexican Grill said it has taken price increases lately that totaled more than 6 percent. Steve Ells, the brand’s founder and co-chief executive, said last month at the National Restaurant Association Restaurant, Hotel-Motel Show in Chicago that the price increases were not optimal, but because Chipotle sources natural ingredients that cost more, they were unavoidable. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
Einstein Noah, the parent to several bagel brands, including Einstein Bros. Bagels and Noah’s New York Bagels, also took price increases of between 1.5 percent and 2 percent in its latest quarter. Panera Bread and Starbucks are other chains that have explored or undertaken selective price increases. Casual dinnerhouse operator Texas Roadhouse took a menu price increase of about 1.5 percent in its March-ended first quarter. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
Restaurant operators do not take the decision to raise prices lightly, especially during tough economic times. Often, however, they have no choice, they said. With food costs rising again—although not near the levels seen in 2007 and 2008—many will be confronted with the dilemma again. According to the latest data from Nation’s Restaurant News commodities columnist John T. Barone, president of Market Vision Inc. in Fairfield, N.J., prices are on the upswing for beef, coffee and dairy. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
At the NRA Show, Buffalo Wild Wings chief executive Sally Smith said setting a new menu-pricing strategy can be difficult, and chains must look at competitor data as well as commodity costs when considering a change. —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.
“If we see that commodities are easing, we won’t take that increase,” she said, “but if it looks like a sustained build, we will have to take that increase.”— [email protected] —According to the April Consumer Price Index, price inflation for food away from home rose faster than that for food at home, a trend that could push more consumers away from restaurants and toward grocery stores.