Fish Food: Restaurant Price Inflation - Quarterly Update

As of September 30th, Florida will join 23 other states this year in raising the minimum hourly wage, moving from $12 to $13 per hour - a significant 8.3% increase. This is part of a larger wage initiative passed in 2020, which mandates annual $1 increases until the minimum wage reaches $15 by September 2026. Additionally, the tipped wage will increase by $1 each year, reaching $9.98 this year, reflecting an 11.1% rise.

The timing and magnitude of these wage increases are critical factors that influence when and how much restaurants adjust their menu prices. Looking ahead to 2025, 21 states have scheduled minimum wage increases for January 1st, with some states raising wages from 7% to as much as 13%. In contrast, wage growth in 16 other states will be more moderate, with increases ranging from 1.5% to 4%, depending on each state’s legislation and its selected inflation index.

Although overall?Consumer Price Index (CPI)?inflation is easing, Fishbowl expects restaurant price inflation? to remain near 4% nationwide through the rest of 2024 and into Q1 of 2025. This sustained inflation is driven largely by rising minimum wages, which continue to tighten labor markets. Wage pressures in the foodservice industry remain one of the primary contributors to increased restaurant costs.

Regional variations in inflation will depend heavily on local wage mandates at the state, city, and county levels. Forward-thinking operators should prepare now by refining their menu and pricing strategies to account for these upcoming wage changes. Understanding the specifics of wage growth and its impacts will be critical in maintaining profitability while managing customer expectations on pricing.