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Food at home inflation is heading straight up.  Restaurants seem to be holding firm.

As inflation has ramped up from the trough in 2009, Food at Home CPI has outstripped Food Away From Home CPI.  Restaurants may be seeing a benefit from this as grocers have moved first in raising prices to protect margins in the face of food inflation.  This could be aiding traffic trends in the restaurant industry, which, have generally been robust over recent quarters.  Additionally, the price action in the space – on a relative basis – has been particularly strong of late.

The question of “when might the supermarkets’ aggressive stance with regard to pricing backfire?” remains important.  To the degree that price increases begin to drive traffic away from grocers, restaurants would be the primary beneficiaries. 

CPI: GROCERY BILLS OUT-INFLATING RESTAURANT CHECKS - food at home

CPI: GROCERY BILLS OUT-INFLATING RESTAURANT CHECKS - food away from home

Howard Penney

Managing Director

Rory Green

Analyst