Food Costs

Restaurant operators’ respite from rising food prices was short-lived, according to preliminary data from the Bureau of Labor Statistics. The Producer Price Index for All Foods – which represents the change in average prices paid to domestic producers for their output – jumped 3.5% between October and November.

November’s sharp increase was the largest single-month gain since May 2020 (+7.8%), when pandemic-induced supply-demand imbalances caused prices to soar. 

November represented the fifth strong increase in the last six months, with October’s 0.9% dip marking the only break in the recent trend higher. 

The recent reacceleration of food prices was in sharp contrast to 2023, when the price index was flat to slightly lower. That gave restaurant operators a bit of relief after the decades-high growth rates of 2021 and 2022. 

Those pricing pressures roared back in 2024, with average wholesale food prices rising 7.6% above their year-ago level in November. That’s the largest 12-month increase since January 2023 (11.2%).

It also means average food prices continue to soar well above pre-pandemic levels. As of November 2024, the Producer Price Index for All Foods stood 35% above its February 2020 reading.  

The recent upward pressure on wholesale food prices was broad-based across several commodities. Producer prices for eggs (94.4%), confectionary materials (38.6%), unprocessed finfish (37.2%), pork (13.7%), coffee (12.9%), unprocessed shellfish (12.7%), refined sugar (10.8%), processed poultry (9.5%), cheese (6.9%) and beef and veal (6.7%) stood well above their November 2023 levels. 

The fresh vegetables index jumped 47.9% during the last 12 months, while the fresh fruits and melons index increased 11.0%.

Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants.