No, it’s not a figment of your overactive imagination. Prices are climbing faster than they have in over three decades, the Bureau of Labor Statistics says.
This year’s consumer price index, published every October, rose 6.2%—the biggest annual jump since the first Bush was president. Almost everything is more expensive, from energy to used cars to cigarettes. But few sectors report price surges like the ones hitting food, and which are starting to be reflected on menus nationwide. According to the BLS data, prices at America’s fast-food restaurants are 7.1% higher than they were in 2020, and the prices at full-service restaurants are 5.9% higher. Both represent the biggest increases the BLS has ever recorded.
Food is suffering the same perfect storm of crises that’s plaguing other sectors: the pandemic, bottlenecked supply chains, extreme weather. Their direct effect on grocery shoppers’ wallets has been making headlines, but higher ingredient costs obviously lead to higher menu prices. The BLS’s data shows jumps in this year’s prices for meat, poultry, fish, and egg. Pork in particular registered the highest jump on record (14.1%), while beef prices rose by 20.1%.
But food prices are also being affected by a particularly acute and thorny labor crisis. Massive strikes over low pay are occurring up the supply chain, while frustrated employees are attempting to organize big restaurant brand’s stores to negotiate better working conditions. Employees’ decreased willingness to work for lower wages and employers’ claim that there’s no extra money because of COVID has left some restaurants saying they’ve had no choice but to raise menu prices. In fact, most fast-food chains did raise theirs this year, some by as much as 10%.
Separate BLS data showing the hospitality industry’s number of job openings doesn’t suggest prices will be coming down soon: In August, the most recent month there’s data for, the industry had 1.5 million job openings, but employers filled just over 1 million of them, leaving a gap of 476,000 unfilled jobs. It’s a radical change from even the situation back in March, when the industry reported 1,015,000 hires versus 989,000 job openings. Not helping things: The fact that hospitality workers are quitting at a rate that’s more than double the national average.
Analysts have begun politely suggesting a paradigm shift. “Restaurants will be forced to increase wages to attract the staff they need,” Moody’s said in a report last month. Some are listening—Brinker International, Chili’s parent company that employs 60,000 workers at 1,600 locations, just announced an “aspirational” goal of paying $18 an hour by 2023. For the others, it may take more time: The price leap doesn’t appear to be putting much of a dent in current restaurant sales. In this quarter’s earnings reports, McDonald’s and Taco Bell announced their best sales since 2018.