Food Cost Concerns Reach New High as Operators Brace for Slower Summer Traffic

Restaurant operators entered June with a mixed picture: profitability ticked up from the prior month, but food cost pressures intensified and traffic expectations softened, according to Datassential’s latest Table Stakes Tracker.

About 74% of operators described the previous month as profitable or very profitable, up from 71% in April. Performance varied across segments, with C&U leading at 85%, followed by retail foodservice at 81%. Both fast casual and casual dining landed at 79%. 

Looking ahead, 50% of operators expect higher traffic in the coming month. Meanwhile, 16% anticipate a decline, continuing a multi-month rise in pessimistic operators. Sales expectations were somewhat more optimistic, with 53% projecting growth.

Cost pressures on operators appeared to be intensifying heading into the summer. Those citing food cost as a top challenge  jumped 3 points this month to 76%. 

Operators are responding by doubling down on cost-reduction goals. The percentage who said they were reducing monthly food costs jumped 5 points to 53%, while those reducing monthly business expenses rose 5 points, to 30%. 

Improving employee capabilities also saw a notable jump, up 8 points from the prior month, to 21%, suggesting operators are investing in workforce efficiency as a margin lever. 

Operators also expressed concern about customers reducing visit frequency, with those pointing to it as a top challenge rising 5 points month over month, to 23%.

But on the consumer side, there were modest signs of stabilization. The share who said they’re cutting back on restaurant meals dipped 2 points to 43%, and those expecting to dine out less or stop completely fell to 34% from 37% the prior month. 

Meanwhile, consumers purchasing food away from home also edged up to 28% of meals, versus 26% a month earlier. Inflation remained the dominant consumer concern at 71%, climbing another 3 points, though worries about healthcare, international conflicts, and U.S. foreign affairs all declined month over month.

Still, the broader financial picture remains strained. The share of consumers saying their financial situation will get worse rose to 24%, and those falling behind financially ticked up to 18%. 

Grocery store price perception also stood out: 64% of consumers said grocery prices seemed higher than the last time they shopped — the steepest reading across all venue types tracked.