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Restaurants plan to raise prices in face of higher food costs

2 min read

Restaurant and Foodservice

SmartPulse — our weekly reader poll in Restaurant SmartBrief — tracks feedback from restaurant owners and managers about current trends and issues.

Last week’s poll question: Is your restaurant raising prices because of higher food costs?

70.99% — Yes.
21.6% — No.
7.41% — I don’t know.

Restaurant-industry consulting firm Technomic predicts that prices at restaurants will increase this year by 2.5% to 3% as companies face rising commodity costs.

The rising costs of ingredients, such as beef, bread, coffee, milk and seafood, are hitting restaurants including Darden Restaurants, Starbucks and McDonald’s. Here’s what the companies are doing:

Darden: The parent company of Olive Garden, Red Lobster and LongHorn Steakhouse says that lower prices for chicken and cost-cutting measures will counter some of the rising prices of key ingredients. Darden hopes to boost profits with new and renovated locations. Darden also is expecting diners to make more visits and to spend more per meal.
Starbucks: With 2011 coffee prices forecast to affect profits, Starbucks is holding its pricing. Starbucks already has purchased coffee for “a few months” of next year, according to a spokeswoman. In 2010, Starbucks’ profits were up after a two-year plan to cut costs and close some locations.
McDonald’s: Expanded value menus and store renovations helped to boost McDonald’s market share last quarter. McDonald’s is expected to raise prices but will use its market influence to implement smaller increases than its competition.

How are you handling the rising costs of ingredients? Join the conversation in the comments.