Inflation Insights in the Restaurant Sector

This week the U.S. government released its latest inflation figures, and while the headline was that inflation overall decelerated to 2.7 percent, the sub-category of food eaten outside the home — that is, food eaten at restaurants — popped upward by 3.7 percent. 

As fate would have it, Darden Restaurants ($DRI) just reported its latest earnings release too — complete with an estimation of inflation for the coming year! So let’s see what Darden disclosed and what other clues about dining out costs one might be able to find by poking around restaurants’ disclosures.

First, Darden’s estimate. The company provided a forward-looking estimate of 3.5 percent inflation for its fiscal 2026 (which is already half over) among various other outlook numbers. See Figure 1, below.

Notice that the 3.5 percent number is tagged; so using our ‘See Tag History’ feature, we pulled up Darden’s prior estimates for annual inflation going back to 2018. See Figure 2, below.

Those numbers kinda sorta align with actual inflation in the United States, although a direct comparison is tricky because U.S. inflation statistics are published on the calendar year and Darden’s fiscal years start on July 1 of the prior year. 

So inflation in the United States in 2022 was 6.5 percent overall, and 8.3 percent for food away from home. But Darden’s fiscal 2023 includes the latter half of 2022 (when monthly inflation was peaking) and the first half of 2023 — when inflation was starting to decline, before a swifter fall in latter 2023 and an overall number of 3.4 percent by year’s end. So evaluating the accuracy of Darden’s fiscal 2023 estimate in Figure 1 isn’t easy.

Other Inflation Disclosures

After that inflation morsel from Darden, our appetite for information increased: What are other restaurant companies saying about inflation? 

The good news is that other restaurants do offer disclosures about inflation, and you can find them easily. The bad news is that most of those disclosures aren’t tagged (they aren’t required to be under federal securities rules) so comparing estimates across companies isn’t easy.

For example, Texas Roadhouse ($TXRH) offered this disclosure in its latest earnings release about inflation driving up costs in the quarter:

Restaurant margin dollars increased 1.1 percent to $204.3 million from $202.1 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased 168 basis points to 14.3 percent as commodity inflation of 7.9 percent and wage and other labor inflation of 3.9 percent were partially offset by higher sales…

Wendy’s ($WEN), on the other hand, only said in passing that its margins in the United States were squeezed “primarily due to commodity inflation, a decline in traffic, and labor rate inflation, partially offset by an increase in average check and labor efficiencies.” No numbers provided.

Chipotle Mexican Grille ($CMG) said labor costs in Q3  2025 “were 25.2% of total revenue, an increase from 24.9% in the third quarter of 2024. The increase was primarily due to lower sales volumes and wage inflation, partially offset by the benefit from menu price increases in 2024.” We can deduce that labor costs were therefore $756.8 million, which is 25.2 percent of $3.003 billion in reported revenue; compared to $695.6 million in the year-earlier period (24.9 percent of $2.79 billion in Q3-24 revenue) — but we can’t assume that wage inflation accounted for all of that year-over-year increase.

McDonald’s ($MCD) offered no informative disclosures about inflation at all.