Foodservice Equipment Reports

Food Prices Continue To Rise Strongly, Menu Prices Not So Much

Wholesale food prices are on a course to show the largest one-year increase since 1980, according to the Bureau of Labor Statistics Producer Price Index data and analysis from the National Restaurant Association. “Average” wholesale food prices, as NRA calls them, and the “finished foods” index in PPI data both rose another 0.6% in September. That comes on the heels of a 1.5% gain in average prices in August and was the 13th gain in the last 15 months. Year-to-year through September, average wholesale food prices are up 7.8%, per NRA calculations.

Why should equipment and supplies folks care about operator food prices? Simple: The run-ups cut into operator profit margins and thus the capital formation needed for E&S purchases.

But there may be some changes coming that impact those equations. On the consumer-price side, once again, supermarket prices increased three times faster in September than menu prices, according to data from the BLS’s Consumer Price Index. Food-at-home prices jumped another 0.6% and are running 6.3% higher than September last year. Menu prices rose only 0.2% and the year-to-year gain is only 2.6%. This disparity has led a number of industry observers to speculate that operators may begin to be a bit more aggressive with menu price increases, in spite of still scratchy traffic and same-store sales numbers.

A big part of the overall wholesale-price gain in September was an 18.8% jump in the price of fresh vegetables, driven in part by the late summer heat wave. Beef and veal prices also surged another 5.4% during the month. And while egg prices fell 9.2%, they remain 52.3% more expensive than a year ago. The surge in prices for most proteins, including dairy products, explains operators’ focus on chicken and other poultry menu items. Process poultry prices fell 0.8% in September, and are running 4.8% lower than a year ago. Beef, by contrast, costs 17% more.

Related Articles

Wholesale Food Prices Jumped 1% In May; Menu Prices Continue To Rise

Happy Thanksgiving! Wholesale Food Prices Fall Again As Menu Prices Continue To Rise

Slumping Crude Pushes Gas Prices Lower Again; Menu Prices Continue to Rise