Morgan Stanley’s commodity index covering North American restaurants registered a 5% year-over-year decline in March, yet the investment bank highlighted a substantial month-over-month uptick in input costs. The bank reported that overall costs rose by 780 basis points versus February, with eggs, chicken, avocados and coffee cited as primary contributors to that advance.
Within proteins, Morgan Stanley said pressure on beef remains persistent. Strip steak prices accelerated to a 10% year-over-year increase in March, up from a 5% annual gain in February, and the cut also climbed 10% month-over-month. Ground beef climbed 14% year-over-year in March and rose 3% compared with February.
By contrast, chicken costs were relatively benign. Morgan Stanley noted that chicken wings and chicken breast were down markedly on the year - 34% and 32% respectively - helping offset some protein-related inflation. Eggs showed more volatile moves: a 70% year-over-year decline in March but a 50% increase compared with February.
Freight was another notable input, with transportation costs accelerating to a 33% year-over-year rise in March, up from an 18% annual gain in February, according to the bank.
On the top-line front, industry same-store sales improved to 1.4% in February, a step up from January, though Morgan Stanley observed that results remain weaker when viewed against a two-year comparison. Casual dining led segments with same-store sales of 2.7% in February. Quick-service restaurants posted a 1.1% comp, while fast casual logged a 0.6% increase.
Independent payment-data from Bloomberg Second Measure showed restaurant sales down 3% through March 15 compared with February, which recorded a 1% decline. The payment-card series has moved lower sequentially since the week ending March 1, the bank reported.
Macro indicators tied to dining costs and consumer behavior provided additional context. The consumer price index measure for food away from home grew 3.9% year-over-year in February, easing 10 basis points from January. Inflation for full service restaurants cooled slightly to 4.6% from 4.7%, while quick-service inflation held steady at 3.2%.
Labor and labor-market metrics showed modest shifts. Restaurant hourly wage inflation eased to 3.1% year-over-year in January from 3.2% in December. The unemployment rate ticked up to 4.4% in February from 4.3% in January.
Measures of consumer health were mixed. Consumer sentiment declined to 55.5 in March, down 2.6% year-over-year. Separately, the personal savings rate rose by 90 basis points in January to 4.5%, up from 3.6% in December.
Taken together, Morgan Stanley’s data portray a restaurant input-cost picture with divergent dynamics: an overall index decline year-over-year but sharp month-to-month cost acceleration driven by a subset of commodities and logistics expenses, alongside uneven traffic and spending trends.