Commodity Costs

BLS FOODSTUFFS INDEX AT ALL-TIME HIGH

The BLS Foodstuffs index increased +36.3% y/y in March to an all-time high.

Two of the largest food distributors also reported sharply higher food cost inflation (Sysco +14.6% and Performance Food Group +15%) which is being partially attributed to the use of more expensive third party contract labor to help meet staffing needs. 

Several commodities reached all-time highs this month including chicken (+76%), coffee (+77%) and wheat (+23%) with Russia & Ukraine producing nearly 25% of the global wheat supply.

Labor

LABOR SHORTAGES ACCELERATE WAGE GROWTH 

Average hourly wages for non-supervisory workers continues to accelerate (+17.4% y/y 12/21) as widespread labor shortages are prompting employers to hike starting wages (Target announced 3/1 that it was raising its starting wage up to $24/hr.).

Both Papa John’s and Domino’s warned on their 4Q investor calls that labor challenges are impacting sales due to shorter store hours and temporary store closures. Domino’s is currently offering a $3 carryout tip (save $3 on next week’s order) for pick-up customers to help combat the shortage of delivery drivers.