Consumers, restaurant operators feel the pinch of rising prices
Every consumer and business owner knows the story all too well by now: the U.S. inflation rate is at its highest point in 40 years, and basic commodities like gas and food have seen the highest rising prices. That’s causing a painful shift in the food industry that’s likely to be felt for some time.
The stunning increase has made consumers hyper-aware of the pinch on their wallets, with 80% saying in a recent Datassential survey that they are concerned about inflation in the U.S. economy, and 82% say they’re seeing signs of inflation and rising prices.
Raised awareness about rising prices
Over half of consumers have experienced higher prices at all types of restaurants, and three in four said they have had to spend more for groceries, according to Datassential’s Five in Focus Post-COVID inflation report.
Most consumers (71%) say they have noticed rising prices at the grocery store, while 56% say they’ve noticed price hikes at convenience stores. Consumers have seen the most price hikes in these two areas, but they’ve also become apparent to many when going out to eat or ordering food from a restaurant.
For fast-food, fast-casual and sit-down restaurants, a little more than half of consumers said prices seemed higher, according to the report. For fine-dining restaurants, 49% of consumers said prices seemed higher, and 42% said prices seemed higher with third-party delivery services.
Fewer consumers perceived rising prices at neighborhood bars/pubs and sports bars, with a little more than a third reporting higher prices with each.
For operators in the food industry, this is particularly a critical issue because consumers are more likely to cut back on ordering in or eating out than they are on groceries, which are a core staple of consumers’ budgets. So while fewer consumers have noticed rising prices on restaurant menus, the impact and ripple effect will be far more widespread.
Navigating cost price increases
On the operator side, more than half of foodservice operators (58%) have had to raise menu prices, mostly to compensate for higher costs and supply shortages.
Operators are navigating higher prices for most commodities, but are feeling the hit most when sourcing beef, chicken and to-go packaging — a particularly hard hit considering the rapid rise in takeout and delivery amid the multiple COVID-19 waves and the growing desire for convenience among consumers.
Chicken is also the most menued protein, and both chicken and beef supplies were already lower earlier in the pandemic as consumers flocked toward them in larger numbers.
According to Datassential, three in four (76%) operators do not foresee inflation improving any time soon, expecting that it will continue to hurt the already-fragile food industry, and two-thirds are worried that consumers will respond by tightening their food budgets.
Nearly half (42%) of consumers planned to already take action by cutting back on restaurant dining in response to rising prices.
Both consumers and operators believe that the worst is far from behind us, saying that rising prices and the resulting consumer price consciousness could continue until inflation eases and broader economic health is improved.
For more macro and micro trends for 2022 and beyond, look here.
For more information about Datassential’s 2022 Trends Report, contact firstname.lastname@example.org.
Samantha Des Jardins is a copywriter at Datassential.
This article was originally published on SmartBrief.