Inflation
- According to the WSJ, inflation is slowing way down
- 2.5% for the past 5 months
- PCE (Personal Consumption Expenditures – what the Fed uses)
- Measures based on gross domestic product report
- CPI (Consumer Price Index)
- Measures based on household surveys (not as comprehensive either)
- PCE (Personal Consumption Expenditures – what the Fed uses)
- Past 12 months it’s at 5.5%, but was at 7.8% for the first seven months of that span
- Can’t do a victory lap just yet, but the signs are there!
- 2.5% for the past 5 months
- For five months, we have experienced a decrease in true inflation, but prices have not followed suit
- CPI Price Changes for 12 months – +7.1%
- PCE Price Changes for 12 months – +5.5%
- It’s only been five months, and this could sway, but it’s telling.
- Is it telling enough for you to bet on?
So what should you do?
- Technomic has been reporting for the past year that consumer trends point to less visits, but bigger spend per visit.
- Restaurant sales up, but so are prices (all-time highs), so is it sustainable?
- January through October 2022 – up 8.6%
- Common sense says that if restaurant visits are down, purchases are down and that means demand is slowing. Supply should then rise, and prices should go down.
- Speaking as a consumer and consultant, I truly feel the best competitive advantage this year is going to be value
- Some are going to race to the bottom on pricing whenever they get a chance
- Olive Garden lowered across the board in Q3 ’22
- Between 1 and 5% across most of the menu
- Olive Garden lowered across the board in Q3 ’22
- Some solutions we are seeing
- Keeping menu prices the same/high, but offering deep discounts on featured items to drive traffic
- Better in bundles
- Dynamic pricing
- Pricing hikes during peak times when demand is the highest, and the opposite during slow times
- Gradually lowering menu prices on certain items where they can
- Keeping menu prices the same/high, but offering deep discounts on featured items to drive traffic
- Episode 18: Menu Engineering
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