Price increases remained elevated in September as year-high gas prices pressured consumers, the Bureau of Labor Statistics reported Thursday, and the gap between grocery and restaurant prices widened slightly in the month.
The Consumer Price Index rose 3.7% for the 12 months ended in September, matching August’s 3.7% gain.
Mark Kalinowski, president and CEO of Kalinowski Equity Research, in a note Thursday, said: “This marks the seventh month in a row for which restaurant pricing is outpacing grocery/supermarket pricing, following no such months during all of 2022.”
Kalinowski noted that the CPI indicated food at home (grocery pricing) and food away from home (restaurant pricing) continued to decelerate in September.
“The latest Consumer Price Index data shows that prices for food-at-home (grocery stores and supermarkets) rose by 2.4% in September (sequentially down by 60 basis points from August’s 3%),” his note said. “This 2.4% number compares with price for food-away-from-home (restaurants) that increased by 6% year-over-year in September (sequentially down by -50 basis points from August’s 6.5%).”
The gap between grocery inflation and restaurant inflation widened slightly sequentially, to 360 basis points in favor of grocery stores, Kalinowski said.
“We do not expect the gap to meaningfully widen from here,” he said. “In fact, by early 2024, we expect the gap to shrink.”
“During full-year 2016, our Kalinowski Restaurant Industry (same-store sales) Index rose by only 1.1%,” the analyst said. “This was the second-lowest such performance of the last seven years, better only than the pandemic-hit 5.9% posted in full-year 2020.”
Kalinowski added that restaurant same-store sales in the second half of 2023 were not expected to be as good as the first half, with the grocery-restaurant gap being one reason.
While commodity-cost pressures are easing, some restaurant chains will still be catching up, he said.
“We expect this number to remain quite high by historical standards for the next one-three months, at least,” he said. “For example, Chipotle Mexican Grill reportedly took some pricing recently.”
The Bureau of Labor Statistics noted, “The index for food away from home rose 6.9% over the last year. The index for limited-service meals rose 6.4% over the last 12 months, and the index for full-service meals rose 5.1% over the same period.”
Kalinowski explained: “The reason that the overall figure for food-away-from-home is higher than the full-service number, and so close to the limited-service figure, is that the overall food-away-from-home figure includes foodservice outside of quick-service/fast-casual and full-service (for example, foodservice to universities, hospitals, corporate offices, etc.)”
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