As spring approaches and restaurants gear up for the busy season, operators are addressing food costs, menu pricing, seasonal hiring, and the potential effects of tariffs. It’s a lot to consider in an increasingly unknown climate.
Here, we’ll explore the anticipated changes in food costs and how restaurants strategically alter their menus to come out on top despite the continued uncertainty.
Inflation & Food Prices
According to the National Restaurant Association, the Consumer Price Index (CPI), an indicator of inflation and pricing, rose by 0.5% in January, representing the fastest monthly increase since August 2023. Year-over-year, inflation rose 3.3%, demonstrating continued challenges.
Surprisingly, grocery prices took the lead, with a rise of 0.5%, the highest increase since October 2022. On the other hand, restaurant menus only saw an increase of 0.2%. Year-over-year menu prices rose 3.3%, the slowest growth in about four years.
While still on the upswing, a 0.5% increase in no way compares to the 13.5% year-over-year increase for grocery sales in August 2022, when inflation was at its peak. Restaurants hit their full stride in March 2023, with a year-over-year rise of 8.8%.
The Price of Food in the Future
Across the globe, “Eggflation” has seen the price of eggs increase by up to 15%. In the U.S., egg prices in December 2024 were 36.8% higher than the previous year. While avian influenza outbreaks are a contributing factor, so are production costs.
According to MSN, China is a country that experiences the world’s highest egg consumption per capita and also produces the most eggs due to factory farming. There, you can buy a dozen medium eggs for about $1.62 as of February 2025. Japan, another country with high egg consumption, saw prices reach $2.08. In France, you’ll pay $3.89 for your eggs, many of which are free-range due to their banning of any new cage farms in 2018.
And what about the U.S.? We come in at $3.91, significantly lower than Switzerland, the highest-priced country at $6.61 and the first to prohibit factory cages.
The USDA expects to see an increase of over 20% in the price of eggs this year. Beef and veal prices are predicted to increase by 1.5%, though tightening supplies could increase this. Pork prices, on the other hand, show the potential for a 0.8% decrease, and chicken continues to reverse its rising trend with a predicted decline of 1.4%.
Due to lower milk production, dairy product prices are predicted to rise by 1.3%, while fresh fruits remain relatively stable with a forecasted 0.7% increase. Changes in production, labor costs, and the persistent effects of previous supply chain disruptions all influence the food market.
Menu Prices
According to Kalinowski Equity Research, as reported by Nation’s Restaurant News, while the gap between grocery and restaurant prices is shrinking, with January demonstrating a 150-bases-point gap, it’s still higher than the 23-year historical 70-bases-point gap. This may be one of the reasons behind the sluggish same-store sales in 2024.
The good news is that pricing is continuing to moderate with Brinker International, the parent company to Chili’s Grill & Bar, Maggiano’s Little Italy, and the virtual brand, It’s Just Wings, reporting an improvement of 20 basis points year-over-year in its most recent quarter’s food and beverage costs.
Restaurant Strategies
So, how are restaurants responding to uncertain and changing food prices? Are eggs off the menu?
No, we’re still serving eggs, but the menu and the recipes behind the items are definitely changing. Like much of the restaurant industry, the key is creativity.
Instead of a three-egg omelet, a beautiful sunny-side-up egg tops a skillet dish filled with potatoes, asparagus, mushrooms, onions, crumbled sausage, and fresh herbs. Essentially, restaurants are reimagining menus, optimizing ingredients that haven’t topped the charts in pricing instead of passing on more of the increasing costs to their customers.
To accomplish this, vigilance is required, including a weekly analysis of changes in the market and ingredient costs. It’s also important to keep track of how other restaurants in your area and the nation are responding to pricing fluctuations, whether raising prices or changing their menu.
One approach more restaurants are turning to is F&B Insights, a platform that, among other things, provides the world’s largest menu database. It offers real-time menus from restaurants around the country and close to home, enabling you to make strategic and informed pricing and item decisions. It also sends alerts any time your competitors make a change in their menus.
It’s clear that, no matter the strategy, it’s essential to keep updated on changing values, costs, and trends in today’s world. From exploring opportunities with suppliers to recipe optimization and keeping an eye on the industry at large, restaurants are finding a way to boost the bottom line without affecting demand by continually increasing prices.
