Why grocery inflation is so bad, and how it’s affecting restaurants

Why are grocery prices going up so much?

This week’s episode of the Restaurant Business podcast A Deeper Dive features Christine LaFave Grace, the executive editor of RB sister publication Winsight Grocery Business, to talk about last week’s consumer price index data.

The CPI rose 8.3% in April. Food prices have soared, rising 9.4%. That includes 7.2% at restaurants. But at grocers, prices are up 10.8%.

This affects restaurants in two ways. First, it increases overall costs for the base consumer, which may cause them to cut back on spending. Yet they also see the prices and start dining out instead, especially given the 3.5% gap in pricing between the two industries.

And indeed, restaurant and bar sales have continued to thrive this year.

We talk about this issue from the retailers’ perspective. Why are grocery prices increasing so much? How are consumers reacting when they do shop for their groceries? And how long is this all expected to last? We also provide some context on what this means for restaurants.