Canada’s restaurants look to raise prices amid inflation, global challenges

In a bid to keep profits sustainable, restaurants from coast to coast say they are looking to raise their menu prices.

In some cases, the increase is not necessarily small.

According to a new report from Restaurants Canada, some restaurant owners are looking to increase their prices by 10 to 15 per cent by the end of this year.

The overall goal is to offset the cost of things like soaring inflation, a lack of staff — which sometimes doesn’t allow businesses to operate normally — and the pandemic.

There are also supply chain issues and the high cost of food, like fruits and meats, that restaurants are having to deal with. Restaurants Canada finds food costs are “among the top challenges currently facing foodservice operators” in Canada.

Restaurants Canada – 2022 Food Service Facts by CityNewsToronto on Scribd

“The combination of Russia’s invasion of Ukraine, poor weather in some growing regions around the globe, and rising input prices for fertilizer and natural gas have led to the recent surge in prices. Unfortunately, experts forecast that there won’t be much of a reprieve anytime soon,” the report reads, in part.

“As a result, food prices have soared to their highest levels since the early 1980s, when food inflation peaked at 16 per cent. Consumers are seeing double-digit inflation rates for fresh fruit (+10.0 per cent) and meat (+10.1 per cent); many younger Canadians will never have experienced food price hikes like they are now.”

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Restaurants Canada adds consumers paid just over six per cent more for food this past April compared to a year ago. Meanwhile, menu prices at restaurants rose more than six per cent.

Sylvain Charlebois, director of the Agri-Foods Analytics Lab at Dalhousie University, notes the report doesn’t look at the “work-from-home phenomenon,” adding this changes people’s relationship with food.

“You’re less likely to go out, dine or have lunch with friends during the day, or basically drive over to a coffee shop to grab a coffee and a muffin or something like that. So you can that really there’s some softness in the market right now when it comes to foodservice,” he explained.

As hybrid work models become more common, Charlebois says there’s a shift in behaviours — but that may not be a bad thing, necessarily, just different.

While lower spending at restaurants and increased menu prices may sound bad, Charlebois notes there are some positives to keep in mind.

“There’s actually a lot of activity out there — people are spending, they want to have a good time, numbers are pretty robust compared to, say, 2019. We’re not at the same level, sales are lower about 10 to 15 per cent than 2019, but it’s still quite positive,” he told CityNews.

“The bleeding is still going on, there’s no doubt in my mind. But I actually do think that the sector is showing signs of resiliency. I mean, a lot of people who have stayed in the business are quite resilient and are actually looking at opportunities, but I would say, probably over the next three or four months, it’s still going to remain quite difficult for the sector because of the economy, because of what’s going on, overall.”

While he says he believes some eateries will continue closing for good, the industry will likely rebound — though not necessarily right away.