A look at today’s restaurant landscape

Although there have been many challenges over the last few years, restaurants continue to recover from labour shortages, inflation, and supply chain interruption. With 51 per cent of restaurants operating at a loss, continued rising costs are challenging operators and consumers alike, as businesses and customers try and find balance between today’s revenue and spending.

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According to a recent study conducted by the Agri-Food Analytics Lab at Dalhousie University, menu pricing is a concern for Canadian consumers. 81 per cent of consumers have noticed price increases on restaurant menus in the last 13 months, and these changes have affected the dining choices of 80 per cent of those surveyed.

Are people still visiting their favourite restaurants? Most people are, with 84 per cent of people being more selective, and 77 per cent opting for more affordable dining destinations. With 89.7 per cent of people becoming more cost-conscious, eight per cent have completely stopped dining out as a result of the rising rates.

What about customer satisfaction? As restaurants try to compete in a crowded market to garner loyalty and maintain their margins, are consumers satisfied with their restaurant experiences? Only 29.5 per cent of respondents expressed that they have been satisfied or very satisfied with their restaurant experiences relative to the amount of money spent in the last 12 months. With the rising ingredient costs, many restaurants have raised their prices, decreased portion sizes, and removed dishes with lower margins from the menu. 62 per cent of people have noticed the smaller portion sizes, and that could be a factor in their declining satisfaction, as perceived value diminishes.

“The current level of satisfaction expressed by Canadians who visit restaurants is alarmingly low. Expectations have clearly changed,” remarks Dr. Sylvain Charlebois, Director of the Agri-Food Analytics Lab at Dalhousie University. “It’s a wake-up call for the entire restaurant industry, signaling the need for innovative strategies to adapt to these changing consumer preferences and economic challenges.”

It is also worth noting that the labour shortages could also be a factor in declining customer satisfaction, as many operators are struggling to attract and retain the staff they need to operate optimally. Recent studies indicate that while there has been significant improvement in labour numbers, as of last month, restaurants were still 14,000 below the pre-pandemic numbers.

Consumer behaviours are continuing to shift as inflation continues. “… Canadians are reevaluating their dining choices in response to the challenges posed by menu price increases and food inflation. It emphasizes the importance of adapting to changing consumer behaviours and economic dynamics in the food service industry,” says Janet Music, research manager of the Agri-Food Analytics Lab at Dalhousie University.

As consumers become even more discerning with their discretionary spending, operators will need to focus on customer satisfaction to keep guests coming back.