NJ Fast Food Prices Rise, Even If Menus Don’t Show It: Here's How

NEW JERSEY — If you've noticed your food bill going up, you're not alone. Across the state, grocery stores, fast-food chains, and restaurants are taking a bigger bite out of New Jersey residents' budgets.

During the pandemic, many Americans relied on takeout or food delivery. Fast-food restaurants offering the convenience of contactless, drive-thru window service were more popular in 2021 than the previous two years.

But some of that affordability is slipping away as fast-food restaurants raise prices in response to supply chain squeezes, labor shortages, and inflation.

Food at home prices increased 5.6 percent over the 12 months ending in January, according to the Bureau of Labor Statistics. The biggest increases were at the grocery store, but food at restaurants increased 6.6 percent during the 12-month period.

The U.S. Department of Agriculture says that as the trend continues through 2022, the biggest increases will likely be the price of a meal away from home. Those meals are predicted to rise 3.5 percent to 4.5 percent, while the increase in the cost of meals prepared at home is predicted to be between 1.5 percent and 2.5 percent.

To appease customers, chains are bringing back the value meals — typically a sandwich, fries and drink for under $5 — they had largely removed from menu boards during the pandemic to focus on items with higher margins.

And in some cases, they’re increasing prices on the quiet by substituting lower-cost ingredients or shrinking portion sizes, David Henkes of the business trends tracking firm Technomic Ignite told CNBC.

Chains are making other changes, such as tweaking their promotions and building their digital presence, to avoid across-the-board menu hikes that could alienate customers.

Here are some examples:

Domino’s: Facing increases in the cost of meat, cheese and grains, Domino’s Pizza is forecasting increases of 8 to 10 percent in its food basket costs in 2022, three or four times the rate of inflation in a typical year, CEO Ritch Allison said at a recent virtual ICR Conference discussing consumer trends.

Rather than impose across-the-board price hikes that would alienate customers, the chain is tinkering with its promotions, CNBC reported. A $7.99 pizza carry-out deal is restricted to customers who order online, where they’ll usually spend more. The chain also is slicing a couple of pieces off its chicken wing specials.

“Moving the offer to online has several benefits,” Allison told conference attendees. “One is a higher ticket, two is a lower cost to serve because we’re not having to answer the phones, and third is that we get access to critical data.”

Burger King: At the same conference, Carrols Restaurant Group, the largest Burger King franchise in the country, said it will continue the practice of lower discounts at least through the first quarter of 2022.

Burger King also cut the number of nuggets in one of its value meals from 10 to eight, and raised prices on french fries and bacon cheeseburgers, Business Insider reported. The chain is also removing the Whopper from the $5 value meal promotion.

Chipotle Mexican Grill: CEO Brian Niccol said on the company’s December earnings call it had increased prices 4 percent in December and that more price increases are likely in 2022.

“There’s no doubt our restaurant-level margin is messy in the near term,” Niccol said.

Shake Shack: Randy Garutti, the chief executive at Shake Shack, a New York City-based chain with restaurants in New Jersey and other states, told analysts on an earnings call last week that price premiums on third-party delivery services will be 10 to 15 percent higher than in-store dining.

“This gives us the opportunity for better profitability on those channels, and even more reasons to drive people to our own digital channels for the best value,” Garutti said.

Popeyes: Fried chicken chain Popeyes’ Big Box deal still costs $5 for customers who order it through the app or website, but they’ll pay an extra buck if they order at the restaurant or in the drive-thru lane. The idea is to drive digital growth, chain owner Restaurant Brands International told CNBC.

McDonald’s: The world’s largest fast-food chain has given its franchisees the leeway to raise drink prices after a longtime national promotion that kept them at $1, the Wall Street Journal reported. The chain’s iconic Big Mac sandwich and Chicken McNuggets also cost more now.

Olive Garden: Some chains are dispensing with promotions altogether. Olive Garden’s Never-Ending Pasta Bowl deal is likely a thing of the past, Darden Restaurants’ incoming CEO Rick Cardenas said in the company’s December earnings call.

Starbucks: Coffee on the go is costing more, too. Seattle-based Starbucks raised prices in January and plans more increases in 2022, CEO Kevin Johnson said in an earnings call earlier this month.