Restaurants may raise prices to keep up with soaring cost of food
Canadians grown accustomed to paying more for their groceries shouldn’t expect to find cheaper prices in the country’s restaurants.
Quarterly figures from Restaurants Canada suggests that 65 per cent of the country’s eateries report their food budgets are higher than they were at the same time last year.
They say soaring prices for beef, pork and produce are eating into already razor-thin profit margins.
In order to keep up, 54 per cent of restaurants say they’re expecting to raise their menu prices some time in the next six months.
That’s up slightly from the previous quarter when 50 per cent of restaurants responding to the organization’s outlook survey planned to raise their rates.
Spokeswoman Joyce Reynolds says restaurants don’t make such decisions lightly, since price increases are an almost surefire way to keep business away.
“It’s an extremely competitive industry, and they have very price-resistant customers,” Reynolds said in a telephone interview. “When they try to increase their prices, they find that customers aren’t willing to pay them.”
Food prices have been climbing in recent months with the cost of beef causing particular consternation.
According to Statistics Canada data released earlier this month, the price at slaughter for 100 pounds of Alberta
“If we’re still busy and the restaurant’s still full and there’s bums in all the seats, I wouldn’t raise prices. I’d find that really hard to do unless we were losing money.”
beef rose to $192.80 in May. That’s a 36 per cent jump from May 2014 and now stands as the highest price on record.
StatsCan figures also suggest the surge is not limited to domestic meat products.
The May consumer price index found that overall food prices had jumped 3.8 per cent from where they stood a year earlier. The year-over-year spike covered all food products. Meat costs soared 7.9 per cent, vegetable prices surged 5.8 per cent, baked goods climbed 3.0 per cent and fruit was 2.9 per cent more expensive.
StatsCan reported that the price increases had already begun to trickle down to the country’s restaurants, with menu prices rising 2.9 per cent since May 2014. This marked the sharpest increase in four years.
The StatsCan figures tally with the recent experience at Richmond Station, a downtown Toronto restaurant whose menu is designed around local ingredients.
Co-owner Ryan Donovan said food costs have climbed three or four per cent in as many months despite the restaurant’s practice of buying whole animals to save money.