It seems like it was so long ago that the food & beverage service industry took one of the biggest financial hits in history. This month marks almost 3-years since restaurants were able to open up to the public for sit down service, and today we reflect just how much that has impacted business owners and consumers.
Summer 2020 was just around the corner in May when officials were starting to set guidelines on how restaurants should operate. Remember the limited capacity before many expanded to outdoor seating? So many communities across the country came out to support local businesses that were forced to close doors for months. Business owners were so excited that many never changed their prices fearing customers would find other places to eat.
Now halfway through 2023 we are starting to see inflation cool down a year from June 2022, when it was at 9.1% and restaurant owners being hit the hardest. Today we take a look at the numbers over the last 3-years to see how much menu items have gone up in price. We took public data and archived menu prices to take a sample size of major markets in the US.
Here in Southern California and like many states across the country, Mexican food has become the number #1 go-to over Italian. Focusing on the most popular food category over the last few years, our team crunched the numbers to gain better insights into what's driving growth in the Mexican food category. What does the demographic look like behind the data? Well, it’s mostly Millennials and Gen-Z making the switch from Italian favorites like Pizza to Tacos.
Let’s take a look at how business owners have adapted to inflation and how that has reflected on their menus. Starting with Southern California, the average price of a taco in 2019 at a sit down restaurant was $2.49 compared to $1.50 for street tacos.
In 2023, those prices have gone up 100% for street tacos and 50% for sit-down restaurants. Many street vendors and taco trucks have now priced their tacos at an average of $3.00 per street taco. While restaurants have increased their taco menu by up to 60% since 2019, averaging $3.99 and up to $12.99 for a plate of 3 tacos with sides.
In fast casual restaurants that represent the majority of Mexican restaurants in Southern California we saw the lowest price changes, averaging an increase of 32% on taco prices. While the average taco at fast-casual restaurants hovers around $3.50 it hasn't stopped them from growing to more than 1-location.
Inflation By Mexican Restaurant Business Model in Southern California:
The fast-casual sector has seen the biggest growth, and that says a lot about what businesses survived and thrived during one of the hardest periods in modern American history. Restaurant owners who adapted to changes saw opportunities to expand locally, and now we have seen how Mexican food has overtaken Italian for the number #1 spot, but it didn't happen overnight. Just as the west coast was growing so were Mexican restaurants in the east coast.
Taking flight to the other side of the country we see numbers shift a bit differently from the higher rising costs in states like New York. The pricing in the east for tacos wasn’t any different in 2019 from the west, but we did see owners starting to increase prices up 50-cents from $2 to $2.50 towards the end of the year. It’s no surprise to us now that prices went up that much after seeing so many news stories about the increasing costs to rent in New York city alone.
Now, more than 3-years later we see those prices reflect even more so than in the west coast. From Queens to New York city we see tacos rise from $2.50 to $4.00 dollars, and at some food-trucks we’ve even seen them as high as $4.50 comparable to ordering at a sit down in the west. So how much has everything gone up for business owners serving delicious Mexican food in the east? Let’s take a look at the numbers by business model.
Tacos in the east with pop-ups like street vending & taco trucks saw their prices jump from $2.00 to $4.00 dollars, and that’s not accounting for specialty dishes like birria. That’s on par with the same increase we saw in the west coast accounting for prices to go up by 100% for street tacos. While at fast-casual restaurants we saw tacos go from $3.00 to $4.00 dollars on average with some taco meats averaging $3.75 on menus. Looking at sit down restaurants we have seen interesting menu changes where some owners have opted out from serving tacos individually.
It’s an interesting take on pricing psychology when you eliminate menu items in the single digit, but we definitely see it as a great marketing strategy to make ordering much easier with plated taco options. In other cases, we are seeing more signature and specialty entrees, like Tacos Gobernador, over street tacos in sit down restaurant menus. Much like in the west we see prices for tacos soaring 50% over 3-years from $4.00 to $6.00 on average in neighborhoods like New York city.
Inflation By Mexican Restaurant Business Model in New York:
Inflation has had a significant impact on the whole food industry, with prices for restaurant menus like tacos increasing by up to 100% in some cases. Forcing many business owners to adapt their menus and implement new restaurant marketing strategies in order to stay competitive.
In both coasts of the United States, we saw the biggest price increases for tacos at street vendors and taco trucks. Smaller and nimble fast-casual restaurants experienced a smaller increase, but they were still able to grow and expand their businesses. Table service restaurants saw the smallest increase in taco prices, but they have also been able to thrive by offering only signature entrees.
The restaurant menu data we collected is just a small sample size, but it provides some valuable insights into how the overall food industry has adapted to inflation. We expect to see less changes in the coming months and years, as business owners continue to find ways to modernize their menus.
We hope this article has given you a better understanding of how inflation is impacting not just Mexican food but the industry as a whole. If you are a business owner who is interested in learning more about current restaurant marketing strategies, please schedule a meeting on our site or contact us today. We would be happy to help you develop a plan that is right for your business.
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Works Cited:
“Consumer prices up 9.1 percent over the year ended June 2022, largest increase in 40 years : The Economics Daily: U.S.” Bureau of Labor Statistics, 18 July 2022, https://www.bls.gov/opub/ted/2022/consumer-prices-up-9-1-percent-over-the-year-ended-june-2022-largest-increase-in-40-years.htm. Accessed 17 July 2023.
Gleason, Will. “22 Best Tacos in NYC You Can't Miss.” TimeOut, 28 March 2022, https://www.timeout.com/newyork/restaurants/best-tacos-in-nyc. Accessed 25 July 2023.
“Menu MVPs: Top Dishes at Major Chains.” Datassential, https://datassential.com/resource/foodbytes-menu-winners/. Accessed 17 July 2023.
Wells, Pete. “Birria-Landia, a Queens Food Truck, Has Changed the Taco Landscape (Published 2019).” The New York Times, 27 November 2019, https://www.nytimes.com/2019/11/26/dining/birria-landia-tacos-review-pete-wells.html. Accessed 17 July 2023.