1851

Restaurant traffic is still on the rise despite record-breaking food prices, a <a href="https://1851franchise.com/fast-food-franchises-face-nightmare-worker-shortage-2715431">labor shortage</a> and the threat of new COVID-19 cases. The QSR segment experienced a 15% gain in visits during Q2 2021 compared to Q2 2020, according to <a href="https://www.npd.com/news/press-releases/2021/the-u-s-restaurant-industry-recovery-through-second-quarter-has-been-slow-and-steady/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">The NPD Group</a>, and is down just 5% versus Q2 2019. Total Q2 full-service visits are up by 60% year-over-year, though they remain down by 17% from the same period in 2019.These increased visits — which is likely a result of <a href="https://1851franchise.com/new-study-reveals-how-many-americans-are-ready-to-dine-out-again-2715641">pent-up demand</a> and <a href="https://1851franchise.com/stimulus-checks-inspire-viral-franchise-buying-tweets-2715254">federal stimulus money</a> — have given restaurants the opportunity to pass rising costs from labor and inflation on to consumers, according to research from <a href="https://www.fitchratings.com/research/corporate-finance/us-restaurants-up-prices-to-offset-labor-inflation-on-strong-demand-09-08-2021?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">Fitch Ratings</a>.&nbsp;Wholesale costs for meat and poultry have gone up more than 20% since the start of the year, government <a href="https://www.bls.gov/news.release/pdf/ppi.pdf?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">data</a> shows, while U.S. producer prices for processed poultry in May hit a record high. To counterbalance these increased food costs and boost sales as Americans return to pre-pandemic habits this year, many chains, including <a href="https://www.nbcnews.com/business/business-news/mcdonald-s-other-fast-food-chains-slash-dollar-menus-push-n1271836?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">KFC and McDonald’s</a>, have been substituting discounted "value" meals for pricier options.&nbsp;Additionally, franchisors have been leveraging the local expertise of franchisees to make price increases that won’t scare away customers. During KFC parent company Yum! Brands' <a href="https://seekingalpha.com/article/4442608-yum-brands-inc-yum-ceo-david-gibbs-on-q2-2021-results-earnings-call-transcript?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">Q2 call</a>, CFO <a href="https://www.linkedin.com/in/christopher-turner-192239112/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">Chris Turner</a> said, "We are also confident in the pricing power of our brands and partner closely with our franchisees as they make strategic pricing decisions in their respective markets to deal with cost pressures."Yum! Brands CEO <a href="https://www.linkedin.com/in/david-w-gibbs/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">David Gibbs</a> added that franchisees use data to slowly boost costs over time so they "don't get too far ahead of the consumer."Prices for food away from home climbed 0.8% in July 2021, its largest monthly increase since February 1981, according to <a href="https://www.bls.gov/news.release/pdf/cpi.pdf?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">data</a> from the U.S. Bureau of Labor Statistics. Year-over-year consumer prices rose 5.4% in June, with limited-service meals up 6.1% over that time period.&nbsp;Despite these price increases, consumer spending at restaurants still jumped 32% in the April, May and June quarter versus the&nbsp; quarter last year, and flat over the same quarter in 2019, according to NPD.Rising food prices may also be a result of increased labor costs. Following the pandemic, businesses across nearly every industry have been struggling to find employees, and the restaurant industry in particular is experiencing its <a href="https://www.bls.gov/news.release/jolts.t01.htm?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">highest quit rate ever</a>. As business owners look for ways to incentivize new employees to join their team, compensation costs within the accommodation and foodservice industry were up 6.2% for the 12-month period ending June 2021, according to the <a href="https://www.bls.gov/news.release/eci.t05.htm?utm_source=1851franchise.com&utm_medium=article&utm_campaign=food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out-2716518" target="_blank" rel="nofollow">Bureau of Labor Statistics National Compensation Survey</a>.&nbsp;The Fitch research also notes that increased operating efficiency may be helping protect restaurant’s profitability. Many operators revamped their labor models, simplified menus and implemented self-serve kiosks during lockdowns. Looking ahead, these operational efficiencies may prove to be helpful if pent-up consumer demand starts to wane.&nbsp;Overall, the restaurant industry has proven it can offset increased food prices for the time being, but with growing <a href="https://1851franchise.com/will-vaccinations-be-the-only-ticket-to-restaurants-in-the-future-2716363">concern </a>over the Delta variant and resurfacing safety restrictions, the future remains uncertain.

Food Prices Are Hitting Record Highs, but QSR Franchisors Say Customers Are Still Eager To Eat Out

1851 Franchise

A pent-up consumer demand and federal stimulus activity have resulted in strong Q2 sales, which may be helping offset rising supply chain, menu prices and labor costs. 

food-prices-are-hitting-record-highs-but-qsr-franchisors-say-customers-are-still-eager-to-eat-out

Home Halo

Home Halo’s 160-Step Launch Process: Setting Franchisees Up for Success

home-halo-franchise-launch-process

VA Reimbursement: A Unique Opportunity for Home Halo Franchisees

va-reimbursement-a-unique-opportunity-for-home-halo-franchisees

Home Halo’s "Frank" Method: Coaching Franchisees to Greatness

home-halos-frank-method-coaching-franchisees-to-greatness

home-halo-dan-deak-personal-journey-headshot

Dan Deak's Personal Journey: From Caring Son to Home Halo CEO

dan-deaks-personal-journey-from-caring-son-to-home-halo-ceo

10 Reasons Why You Should Invest in a Home Halo Franchise

10-reasons-why-you-should-invest-in-a-home-halo-franchise

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Dave’s Hot Chicken Sold to Roark Capital in $1 Billion Deal to Fuel Global Expansion

daves-hot-chicken-sold-to-roark-capital-in-1-billion-deal-to-fuel-global-expansion

Homebuyers Keep Buying — And That’s Good News for Home Service Franchises - 1851 Franchise

Homebuyers Keep Buying — And That’s Good News for Home Service Franchises

homebuyers-keep-buying-and-thats-good-news-for-home-service-franchises

AI Could Push Unemployment to 20% — Fueling a Surge in First-Time Franchise Buyers - 1851 Franchise

AI Could Push Unemployment to 20% — Fueling a Surge in First-Time Franchise Buyers

ai-unemployment-impact-white-collar-job-loss

How To Sell Just One Franchise: What You’ll Learn at FranCamp NJ 2025

how-to-sell-just-one-franchise-what-youll-learn-at-francamp-nj-2025

House Passes Tax Relief Package With Key Benefits for Small Businesses and Franchises

house-passes-small-business-tax-relief-bill-2025

McDonald’s To Hire 375,000 Workers as It Prepares for Major U.S. Expansion

mcdonalds-to-hire-375000-workers-as-it-prepares-for-major-us-expansion

The Ultimate Guide to Selling Franchises: How To Create a Strong Incentive

how-to-build-strong-incentives-to-attract-prospective-franchisees

How Car Sales Taught Buddy's Home Furnishings’ Mitchell Lee the Secrets of Franchise Development

how-car-sales-taught-buddys-home-furnishings-mitchell-lee-the-secrets-of-franchise-development

What You Need To Know About Low-Cost Franchise Opportunities

what-you-need-to-know-about-low-cost-franchise-opportunities

Sola Salons Franchisee Grows Salon Freedom Into a Multi-State Powerhouse 

sola-salons-franchisee-grows-salon-freedom-into-a-multi-state-powerhouse

Dan Yangas Brings Family Flooring Legacy Full Circle With Footprints Floors Franchise in Naperville 

Dan Yangas Brings Family Flooring Legacy Full Circle With Footprints Floors Franchise in Naperville, Illinois

dan-yangas-brings-family-flooring-legacy-full-circle-with-footprints-floors-franchise-in-naperville-illinois

Franchisee spotlight graphic with photo of Sean Phelan & Caring Transitions logo

From Tech to Transitions: Why This Caring Transitions Franchisee Left the Corporate World To Help Families Navigate Life’s Hardest Moves

sean-phelan-caring-transitions-franchise-austin

Food Prices Are Hitting Record Highs, but QSR Franchisors Say Customers Are Still Eager To Eat Out

MORE STORIES LIKE THIS