Have you been out to dinner lately? Went grocery shopping? Chances are you’ve probably done both in the last month or so. However, just in case you’ve been hibernating for the winter and weren’t aware, prices for everything under the warming spring sun have been on the rise.
Even though the economy is slowly inching back to normal, droughts, freezing and battles overseas have put a drain on every aspect of the food economy. According to an article in the Boston Globe, The US Department of Agriculture has predicted that US food prices are expected to jump between 3 and 4 percent this year, about twice the general rate of inflation, after rising last year by the slowest rate since 1962.
These price hikes have led many grocery stores increase prices to the consumer which means huge hikes in the average family’s spending. According to a 2009 report from the Bureau of Labor Statistics, in the same Boston Globe article, Americans spent more than $3,500 annually, or about $72 a week, on average in 2009 on groceries. Harry Balzer, chief industry analyst at NPD told Reuters, “Right now, supermarket prices are rising faster than restaurant prices.” He also added, “While Americans prepare 72 percent of their meals at home, they spend almost half of their food dollars in restaurants.”
This spending could be due to the fact that restaurants have a variety alternatives to take advantage of along with increasing prices. One such choice, especially with larger chains, is to lock in prices on items that are likely to go up in price, whereas grocery stores have a much harder time negotiating. Restaurants have also tried other tactics to keep business afloat during the down economy such as Applebee’s value based 2 for $20 menu that has allowed sales to grow by up to 17 percent according to Nation’s Restaurant News.
Smaller, more local businesses have also both felt the strain of the economy and found ways of working around it. Ron and Eric of Rock Star Pizza say they’ve stopped using green peppers because the item has gone up by 600%. Alternatively, Keith Reilly of O’Reilly’s Irish Bar and Restaurant has begun looking for ingredients to use in dishes that will reduce costs and allow him to stay competitive. However, even with small price boosts and item substitutions, both owners say business has actually increased. Reilly says the improved traffic is “obviously not because of rising costs. We have wonderful regulars and a great staff who produce a great product at a competitive price.” Ron and Eric, feel their amplified business is due to the fact that “A lot of people are “Dining Down” saying that instead of going somewhere more expensive, “They can get the same dining experience for less at my Pizzeria.”
So while global food prices rose 25 percent last year and set a record last month, according to the United Nations in an article from Business Week, there are some good signs of more affordable opportunities. During this time it’s most important to shop around both at the grocery and for restaurants. So many eateries are making an attempt to make customers happy and keep prices down. Look for lower cost alternatives to your favorite dishes and maybe you’ll even find an exciting new item or restaurant that might save you that extra dough!
What price increases have you noticed either in the stores or while out to eat? Have you taken steps to cut costs on food? Share your tips and experiences with us below!