Restaurants Gain Pricing Power in 2011

According to Nation’s Restaurant News, “As commodity prices rose through 2010, restaurant operators kept one eye on increasing costs and the other on the tight grip that recession-battered consumers kept on their wallets. Now they may be able to at least blink.”

“Restaurants may begin increasing menu prices next year without the fear of losing customers accustomed to deals and discounts, according to a recent report from Jeff Omohundro, a senior securities analyst at Wells Fargo Securities. He based the “increased confidence in restaurant-sector pricing power” on recent data from the Bureau of Labor Statistics that showed inflation for food at home and food away from home approaching the same rate. ‘With the rate of inflation for food at home increasing in recent months to 1.4 percent, in line with food away from home, we think restaurants may be better positioned to pass along menu price increases to consumers,’ he said.”