Consumers eat more dairy products at restaurants than when dining at home. So, it stands to reason that dairy product sales could strengthen given nearly 60% of restaurants surveyed by Restaurants365 plan to expand their business in 2023. This business dynamic could take place even with the double headwinds of higher labor and food costs.

The restaurant and home meal paradigm first shifted in 2015, according to U.S. Department of Commerce data. That’s when Americans began eating more meals in restaurants than at home. The historical first was reported in the Hoard’s Dairyman Intel article “Food sales in restaurants trumped grocers.” The only interruption to this trend was the COVID-19 pandemic. Given the 60% expansion forecast, restaurant meals are posed for further upward movement.

In dairy’s case, the growing “eat away from home” trend has been good for cheese, yogurt, and butter, as those products have been well featured in restaurant entrees. The same cannot be said for fluid milk sales.

The labor and food costs duo

“Food and labor are two leading cost drivers that impact a restaurant’s bottom line,” wrote Jenny Day in her article “Restaurants365 releases 2022 State of the Industry survey results.” “Most respondents noted increases in both, with labor costs increasing 9% and food costs increasing 10%, on average.”

Day continued, “Amid increasing inflation, many operators found it necessary to increase menu prices to balance margins and the consumer experience. In 2022, 92% of surveyed restaurants increased their menu prices, with the average increase being 8%.

As for 2023?

Nearly three-fourths (73%) plan to increase restaurant menu prices again.

Since those price hikes are across the menu, dairy sales should see minimal impacts in restaurants.

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(c) Hoard's Dairyman Intel 2023
January 9, 2023
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