Is that my bill? Eating out at full-service restaurants getting more expensive

by Kim Boateng Posted on February 22nd, 2019

You may want to make “dinner and a movie” just “a movie.” Prices at full-service restaurants – eateries with waitstaff, unlike fast-food joints – are on the rise, according to the U.S. Department of Labor.

Experts point to restaurants’ increased expenses – like labor, rent and insurance – as the reason they’re charging customers more.

Some patrons have begun to cut back on how often they dine out.

“I work two jobs, so I like to have someone take care of me for that half an hour,” said Jessica Tickle a 42-year-old accounting assistant from Christiansburg, Virginia. “I’ve just noticed going into a couple of places. You’re used to your bill being one thing, and then it sneaks up.”

In December, prices at full-service restaurants were up 0.5 percent from the prior month on a seasonally adjusted basis, the biggest monthly increase since March 2011, according to the consumer price index. And in January, full-service restaurant prices were up 2.7 percent from a year earlier, well above the 1.6 percent annual rise for inflation overall.

“Ironically, what hasn’t been going up is food costs; those are stable,” said David Henkes, senior principal for Technomic, a Chicago-based food industry consulting firm. “It’s a catch-22. Restaurant operators need to cover costs, but consumers can’t always cover those costs.”

Tickle has been dining out about once a week, mostly at chains including Olive Garden, Outback Steakhouse and Red Robin. But now, she’s set a limit for how much extra she’ll spend, including tip. Instead, she’ll eat at home more.

“I go a little less,” Tickle said. “If it’s more than $6, that’s my cutoff.”

Higher costs are partly due to labor
Staff pay is a key component. The federal minimum wage is $7.25 an hour, but some states have set their minimum wage above that. In addition, in 2019, 22 states and Washington, D.C., are raising theirs higher; the majority of those hikes took effect on Jan. 1, according to the National Employment Law Project.

For tipped employees, the federal minimum wage is $2.13, if three conditions are met, according to the U.S. Department of Labor. That’s the case if the $2.13, plus tips, equals the federal minimum wage, if the employee keeps all the tips and if the employee usually gets more than $30 a month in tips. If not, the employer must make up the difference.

As of Jan. 1, seven states require employers to pay tipped workers the full minimum wage regardless of tip, and 26 states and Washington, D.C., require employers to pay tipped staff a minimum cash wage above the $2.13 the federal Fair Labor Standards Act requires.

Plus, the jobless rate in the U.S. is now less than 4 percent and a tight labor market means restaurants have to pay more to recruit, retain and train employees.

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“The challenge is for operators is how can far they push those prices before they get pushback,” said Henkes, who predicts customers shifting to fast-food and fast-casual restaurants, meal kits, food trucks and other options. “Ten years ago, it was either a restaurant or a grocery (store). Now, look where they can go. There are so many more choices out there.”

Chattanooga-based writer Denise Turney, 56, said she’s unsure how rising full-service restaurant prices will change her dining-out habits. She currently goes out two or three times a month to Carrabba’s or a local mom-and-pop eatery and would consider pulling back to once a month.

“One of the main reasons I go out to restaurants is to celebrate a birthday, anniversary or an event,” Turney said. “If the decor is nice and the service is good and the food is delicious, even if there’s a slight price increase, even as much as 10 percent, at a favorite restaurant that could offer me an experience I couldn’t get at home – for that I would still go. I wouldn’t go off and trade it off to a McDonald’s.”

 

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Kim Boateng

Kim Boateng

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