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Curry House Japanese Curry and Spaghetti has shuttered, closing all 9 units in Southern California
Employees learned of closure when arriving for work Monday
Menu prices at both QSR and full-service restaurants rose in April, while grocery prices fell for the first time in months.
Let’s check in on menu inflation because if Q1’s widespread traffic losses taught us anything, it’s that many consumers have reached their restaurant pricing threshold. According to the Consumer Price Index released Wednesday, menu prices in April rose 0.3%, or 4.1% over the last 12 months.
After some hints of flattening and even cooling in recent months, quick-service prices accelerated in April, rising 0.4%, and are 4.8% higher than this time last year. This uptick came despite overall inflation cooling in April after months-long increases. QSR prices were more than likely impacted by California’s AB 1228 law that went into effect April 1, raising the minimum wage in the state from $16 an hour to $20 an hour in the segment, or by 25%. Indeed, new data from Revenue Management Solutions found that California’s pricing in April was up 5.7% versus the national average of 2.6%. Several limited-service companies, from Chipotle to McDonald’s to Domino’s, noted on their latest earnings calls that they’ve had to take high-single-digit price increases to manage labor inflation in California.
By comparison, prices at full-service concepts, which aren’t directly impacted by AB 1228, were up 0.3% in April, or 3.4% year-over-year. Despite pesky QSR prices, food-away-from-home index overall matched March’s 0.3% and, aside from February (0.1%) was the lowest uptick in at least six months.
Meanwhile, food-at-home prices (grocery/supermarket) dropped by 0.2% in April. Although the category remains 1.1% higher year-over-year, April was its first decline in at least seven months. According to Kalinowsi Equity Research, restaurants’ market share in April was 55.8%, but the widening price gap between categories is shifting more spending toward grocery stores.
During a recent interview, RJ Hottovy, head of analytical research at Placer.ai, said there have been clear indications of increased pricing sensitivity from restaurant consumers recently.
“A lot of people are starting to shop across other channels. More are going to value grocers, like Aldi, more are going to c-stores. More are going to dollar stores,” he said. “You are seeing some channel shifts, particularly among low-income consumers.”
Contact Alicia Kelso at [email protected]
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