As spring turns to summer, several trends are shaping up in the restaurant industry. One comes as some surprise to a few and no surprise to many—rising menu prices. And, while ever hopeful, restaurant operators also have high expectations for increasing revenue, though consumers may be throwing a nunchuck into that assumption. Lastly, for those in a drink out, we’ll inspire you with the most popular drinks as summer approaches.
Let’s get started.
#1 Rising Menu Prices
As we all know, restaurant prices have been on the rise in the last few years as operators face the same inflation the rest of the country experienced. While many thought we might be on the downside of continuing increases, the USDA states otherwise. Food prices are expected to grow slower than in 2022, thank goodness, but still fall above historical averages.
In 2023, food prices are expected to increase by 6.2%. Food-away-from-home prices (that’s us) are predicted to increase by 7.7%, with food-at-home prices adjusting to an increase of 6.2%. April showed a persistent increase, with food-away-from-home prices up 8.6% on an unadjusted 12-month basis. By comparison, grocery prices continued to fall and now sit at 7.1%.
And how about those eggs? Eggs had the largest price increase, just over 32%, from 2021 to 2022, thanks to the Highly Pathogenic Avian Influenza (HPAI). And while they’ve been on the decline, they are predicted to increase another 16.6% in 2023. Prices are also expected to continue rising for dairy products, meats, fats and oils, sugar and sweets, processed fruits and vegetables, cereals, bakery products, and nonalcoholic beverages. And so, it’s not surprising to learn that some restaurants are also following suit.
#2 Consumer Sentiment & Operators Expectations
Because we’re an optimistic bunch, restaurant operators are expecting a good summer. However, last year’s summer sales were, for some, cooler than anticipated due to the changing economy and rising gas prices. A survey conducted by Datassential found that about one-third of consumers plan to eat out less in June, while about 50% plan on maintaining their current restaurant spending. Almost 50% of restaurant operators expect higher sales or improved traffic.
According to CNBC, Huy Do, the research and insights manager at Datassential, stated, “I think operators are still hopeful for a good summer boon in foot traffic and sales…but I think on the consumer side, they’re more hesitant.”
Last summer, restaurant sales were down in June and July, but they rose in August thanks to lower gas prices and higher consumer confidence. As we head into summer, customers may be pushing back a bit on higher prices. The first quarter of 2023 saw an 8% increase in consumers taking advantage of restaurant deals compared to last year.
#3 The Beverage Menu & Human Nature
A study of 2,000 adults in the UK found that 61% feel as if they’re stuck in a rut. While most would be content with a different hairstyle or car, about 30% said they’re looking for a new job, and 12% said they’re looking for a new partner. Human nature.
To help you burst out of any stagnant sensations, we’re sharing a few of the most popular drinks as the summer season begins. After all, it’s what we put into our bodies that shape much of our awareness, and, well, if you’re going to start switching things up, this is a good place to start.
Dark and Stormy
3 oz ginger beer
2 oz dark rum
½ oz lime juice
Mix together in a tall glass of ice.
This drink may be growing on the bartender’s asked-for list because it’s a great name. “I’ll have a dark and stormy, please.” Though not as fun as ordering an Arrogant Bastard. (That’s the name of a beer made by Stone Brewing Company, in case you were wondering).
2 oz cachaca
1 Tbsp fresh lime juice
1 Tbsp sugar
Use a muddler to squeeze out the lime juice before combining, shaking, and pouring into a short glass with crushed ice. Known as Brazil’s national cocktail, it looks as refreshing as it sounds.
#4 Menu Pricing
As spring turns to summer, restaurants will undoubtedly switch their menus to lighter fare and citrusy beverages like the two we’ve shared. Is your summer menu ready? It’s difficult when prices tend to change steadily, and keeping up requires calculus. There is a better way.
F&B Insights, a division of EMERGING, is a platform that helps bars, restaurants, and hotels increase profits with AI-driven menu pricing. This tool lets you leverage nationwide market intelligence, giving you access to updated restaurant menus in the US and your area. Now, you can see what your customers see when they head to your competitors, and price accordingly.
This same platform provides an additional revenue stream and offers brand education and training, keeping your staff motivated and engaged. Are you ready to learn more? To explore the many benefits of F&B Insights, contact EMERGING today.