Retail food inflation outpaced restaurant menu prices for 2nd time in three months

Restaurant prices have normalized in recent months, just as prices at retail outlets like grocers appear to be accelerating. 

Food away from home prices increased 0.3% in November, continuing a period of more moderate menu price inflation than had been the case for the past two years, according to federal data released on Wednesday. 

Prices for food consumed at home increased 0.5% on an adjusted basis. It was the second time in three months that retail food prices outpaced restaurant menu prices. 

Restaurant menu prices are up 3.6% over the past year, compared with 1.6% at grocers and liquor stores. The 2 percentage-point gap in annual inflation between the two industries is the narrowest since May 2023.

The numbers nevertheless show a more normalized rate of inflation at restaurants appears to be taking hold. Prices for food away from home have increased either 0.2% or 0.3% for each of the past five months. 

Prices at limited-service restaurants are up 3.7% over the past year. They rose 3.6% at full-service restaurants. They have increased 3.5% at employee sites and schools. But for the lowest rate of inflation, check your nearest vending machine. Those prices are up just 0.5%.

At grocery stores, prices are down for items like canned and frozen fruits and vegetables. Fish and seafood, as well as bacon and most bakery products are also down. Prices for beef and pork chops are both up 5%. 

Related:Shoppers still concerned about inflation but focused on healthy eating

The highest inflation rate at the grocery store, however, belongs to eggs. Those prices are up 37.5% over the past year, including 8.2% last month. Poultry farms have been contending with an outbreak of bird flu for the past two years, which has limited supply. 

For restaurants, the more moderate level of inflation suggests the industry has shifted to a more normal rate. 

Soaring menu price inflation led to broad consumer frustration with prices, particularly for fast-food chains. The result sent traffic plunging at such restaurants, particularly with lower-income consumers. That ignited a value war as chains like McDonald’s, Burger King, Wendy’s, Subway and others pushed discounts and lower prices to get customers in the door.

That value war is expected to continue into next year, as McDonald’s is set for the creation of its McValue menu, which combines offers such as one giving customers a selection of items for $1 with the purchase of another item, as well as various local and mobile app deals. Convenience stores such as 7-Eleven have responded with discounts of their own. 

Overall, inflation is up 2.7% over the past year, including 0.3% in November. 

Related:Natural Grocers’ 2025 trend predictions

This story was originally featured on Restaurant Business, a sister publication of Supermarket News.