The sector is entering a new and step-changed period of more substantive menu price inflation, the latest MCA data has shown.
Presented at yesterday’s Menu & Food Trends Debrief, MCA’s analysis of menu prices across 120 casual restaurant, fast food and pub restaurant chains, showed a significant year-on-year increase for Q2 2016, compared to previous periods.
Between Q2 2015 and Q2 2016, the average price for the cheapest (entry) dishes on the menu increased by 3.8% to £7.20. This compared to a 2.6% rise between 2014 and 2015. Looking at the typical dishes across the menus, prices were up 1.5% to £10 (2014-2015: 1.1%), while the most expensive products (exit) rose at the sharpest rate of 5.2% compared to 0.1% in the previous year.
Looking at a breakdown of the increases, exit main dishes and entry sides saw the highest price rises in percentage terms.
Focussing on casual restaurants, Honest Burger saw the highest increase in typical mains prices – up 16.7% with the brand pricing Honest and Tribute burgers at £10.50. Vapiano saw the second highest rise of 14.5%, after introducing a number of dishes priced £10.25.
The research predicts a widening in the price range of casual restaurants with evidence showing this has already started. At Las Iguanas, for example, the difference between entry and exit prices on the menu has increased from £8.60 in Q2 2015 to £17.55. However, some operators including Bills’ and Carluccio’s have bucked the trend. The research indicates that this was principally due to entry prices increasing but exit prices being frozen or reduced.
The full debrief, available to Food Strategy Forum members, lists the price ranges for individual brands and analyses the trends across pubs and fast food brands.
MCA director of insight Steve Gotham the price hikes are unlikely to stop here with operators incurring higher cost pressures, not least in terms of staff and property costs, and looking to offset these through higher prices.
He said he expected a greater focus on exit prices going forward but warned that consumers will continue to closely scrutinise the value offered, meaning higher prices are likely to require greater justification and more encouragement to trade-up.
