Iowa restaurants shrink menus and portions amid inflation squeeze

Rising food and labor costs have put Iowa restaurants in a bind, resulting in some offering smaller menus and decreased portion sizes, Jessica Dunker, CEO of the Iowa Restaurant Association, tells Axios.

Why it matters: Iowa’s nearly 6,000 restaurants and bars play an important role in the state’s economy, employing more than 137,000 people, according to the association.

• Even though some establishments are posting record revenues, Dunker says many aren’t making a profit and are forced to make tough decisions to stay afloat.

The big picture: Food-away-from-home inflation increased 6.9% year-over-year, according to a Bureau of Labor Statistics report released last month. It’s the largest 12-month increase since 1981.

• About 74% of American diners say they plan to dine out less frequently, according to a new survey by restaurant management software company MarketMan.

State of play: Dunker says that “is absolutely ringing true” of consumer behavior in Iowa.

• Restaurants recognize there’s a threshold of what people will pay, which makes it difficult to increase menu prices enough to fully cover inflation, Dunker says.
• Plus: Some are offering fewer menu items to help run more efficiently.

What they’re saying: Customer behavior is also changing, and specials are becoming more popular, Amy Walsh, owner of Mickey’s Irish Pub in Waukee, tells Axios.

• Walsh says the pub has resisted raising prices, but they’re facing pressure from exceptionally high hikes in costs for items like chicken wings and beef in recent months.

The bottom line: Inflation is squeezing restaurants, and you could feel some of that pain.