You've likely noticed a common trend on fast-food menus this year: the prices are getting higher. An increasing number of customers are dining out again as the COVID-19 pandemic comes under better control (67% of Americans now feel comfortable going out to eat, according to Morning Consult) but they are paying more to do it.
There are three primary reasons prices have been on the rise at restaurants: a shortage of labor, a shortage of supply, and ongoing inflation that's raising the prices of various goods. As a result, we've witnessed a 3% price increase at Cracker Barrel, Red Robin, and Taco Cabana, a 4% increase at Chipotle, and a 5% increase of delivery prices at Shake Shack so far this year.
According to Restaurant Business, Del Taco is now joining the group of chains where prices are skyrocketing with a 5.5% increase of its own. The chain's leadership has cited chronic labor issues along with higher food costs as reasons why the prices of its menu items are slated to rise in the fourth quarter of this year.
But the chain also reports an overall increase in same-store sales, with corporate-owned restaurants enjoying a 1.6% increase in sales in the third quarter of 2021. And system-wide (meaning corporate and franchise locations), Del Taco saw a sales increase of 1.8%.
So why does the chain need to hike prices? Because those ongoing labor issues are a two-pronged problem: first, without enough workers on hand, many locations are resorting to limited hours, which means less opportunity for sales. And second, many Del Taco locations are raising wages to attract and retain employees, which cuts into profits.
There are currently about 600 Del Taco restaurants in America, and many are located in states where the minimum wage is now or will soon be set at $15 an hour, according to Restaurant Business. Thus inflation and labor laws are playing a role here, and those factors are beyond what Del Taco or any fast-food chain can control. The reaction in the form of higher prices is therefore hardly surprising.
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