Menu options fall as food prices inch higher

It isn't just costing families more money to put food on the kitchen table; it's costing restaurants more money to prepare meals for their guests. As a result of how much they're spending and a temperamental supply chain, a substantial portion of eateries are downsizing their menu offerings.

Close to one-third of restaurant owners say they're offering fewer dishes to their dine-in and take-out customers, according to a newly released poll conducted by Toast. Querying more than 900 restaurant decision makers, the wide-ranging survey covered many of the challenges dining establishments have encountered over the past several years, from staff shortages to supply chain disruptions to the effects of inflation on their bottom lines. Of all the adversities restaurants have encountered, inflation appears to have inspired the most corrective measures. For example, in addition to 31% who admit to streamlining their menus, 39% acknowledged they're now keeping track of prices for ingredients they use frequently, or that are important to specific dishes. Around 38% said they've also changed how many suppliers they're using because of supply chain inconsistencies.

Ingredient shortages have affected major food processors as well, particularly staple crops like potatoes, which are commonly used in items like cereal, chips, crackers and for frying purposes. After an underwhelming season for potato production, Lamb Weston says it's been successfully using pea starch in lieu of potatoes since it is similar in consistency to potatoes when used for cooking. It's had the added benefit of also helping the Boise, Idaho-based potato processor reduce food waste as well as food costs.

Leveraging more affordable ingredients is another way restaurateurs are pinching pennies. The Toast poll revealed around 30% of respondents have substituted some of their traditional ingredients for those that cost less.

Nearly 1 in 3 restaurants say they're offering fewer dishes due to persistently high food costs.

Other compelling reasons for smaller menus
Even before food costs became a pervasive issue, an increasing number of restaurants were opting to reduce how many dishes their customers had to choose from for ordering. Advocates of this approach say it make sense not only from a business perspective, by reducing food waste and the cost of food, but from a customer satisfaction perspective as well. Since restaurant diners can often find it difficult to narrow down which dish they want, right-sizing the menu and focusing on improving the quality of a select number of dishes can make the dining experience more enjoyable.  

Generally speaking, business costs for restaurants break into three categories: labor, food and overhead. As with other industries, virtually all of their expenses have swelled due to inflation, but this is true for food in particular. While restaurants have been forced to raise what they charge, it hasn't been at a rate that's consistent with how much extra they're spending. Indeed, according to the National Restaurant Association, wholesale food prices are up more than 16% over the past year as of August. Menu prices, meanwhile, are up 7.6% over that same period.

National Restaurant Association CEO Michello Korsmo pointed out that dining establishments have had to cut back in other ways as a result, such as by reducing their menu options or closing earlier than they normally do.