The middle class can’t afford to dine out

Seems like the middle class just can’t catch a break.

With stagnant wages over the last 50 years, persistent inflation, and ever-increasing costs of living, the middle class is also struggling to afford dining out at restaurants.

Let’s take a look at what’s going on.

What we’re watching

Food costs at grocery stores and restaurants have soared over the last five years. 

While the U.S. Department of Agriculture predicts food costs at grocery stores will stabilize in 2024, it expects restaurant meal prices to continue rising. 

In a recent report, the USDA anticipates that restaurant meals will end the year up 4.7 percent.

Why it matters

As rising food costs continue to close wallets across the U.S., researchers have painted a rough forecast ahead for restaurant owners and operators. 

Restaurant traffic was down in 2023, and analysts expect the trend to continue in 2024. Experts say inflation, price sensitivity, and limited access to capital will continue to plague operators in 2024.

Why it’s becoming unaffordable

Post-pandemic inflation has significantly impacted household budgets, leaving families with less discretionary income. Rising costs of essentials like housing and healthcare have forced individuals to scrutinize every dollar.

Restaurant owners are also feeling significant pressure. Restaurants face increased operational costs from food, labor, utilities and rent. With slim profit margins, they have little choice but to raise menu prices to stay afloat. 

Other gripes

• Tipping culture: A majority of Americans report increased pressure in the expectation to tip across various service settings — aka "tipflation." Now, customers say they feel expected to tip 15% for poor service and up to  25% for good service.
  
  
• Rise of the surcharges: To offset growing expenses, some restaurants are now adding surcharges and additional fees to customers' bills. The surcharges cover increased costs like healthcare, utilities, and credit card transaction fees.
  
  
• Pricer menus: Between February 2020 and November 2023, menu prices shot up by 24%, according to the National Restaurant Association. That rate of increase is higher in some states, including New York, New Hampshire, and Illinois.