Survey finds food cost increases will beef up menu prices

Jan. 30, 2014

A recent survey from SpenDifference found that American chain restaurants plan to increase menu prices as part of a move to offset higher food costs.

Last year, 83 percent of the chains surveyed increased prices somewhat, while this year 92 percent are planning hikes, according to a news release from SpenDifference. This year's increases are expected to average 1.8 percent, compared to last year's 1.65 percent. The chains predicted their food costs will go up an average 1.7 percent.

"Operators are mimicking what is happening with inflation," said SpenDifference President and CEO Maryanne Rose. "Their menu price hikes are only covering their increased food costs without taking into account potentially higher health care and labor costs."

She added that SpenDifference clients can expect to see their costs flat this year, unless they are heavy beef buyers, which will push up their costs.

The survey found one-third of chains plan to raise prices at least 2 percent this year, but that will allow for little cushion. SpenDifference predicts food costs will go up the same amount. To counter rising food costs, two-thirds of chains said they are renegotiating contracts, while more than half said they are promoting items with lower food costs and developing limited-time offers with less expensive ingredients.

"Historically, foodservice operators have been very hesitant to raise prices to account for inflation," Rose said. "This survey shows they are using price to cover higher costs while finding other ways to better manage their margins."

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Topics: Food Cost Management, Operations Management

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