Menu prices at restaurants in Canada were 3.1 per cent higher in July 2021 than they were a year ago, reports Restaurants Canada.
This represents the largest increase since January 2019, and is over three times the magnitude of the rise in food prices at grocery stores, which climbed by 1.0 per cent.
Since January 2019, menu prices inflation had not been above three per cent in any month until July 2021. In 2021 so far, the figure has been hovering between 2.5 and 2.9 per cent.
By segment, quick-service restaurants were slightly ahead of their full-srrvice counterparts, with QSR menu prices rising by 3.3 per cent compared to a 2.9 per cent climb for FSRs.
Restaurants Canada suggests the increase in menu prices is the result of higher overall operating expenses, including cost of sales, labour, and other expenses.
A survey of the organization’s members found that the foodservice operators are seeing significant cost pressures as the price of a number of key ingredients have increased dramatically. In particular, seven in 10 restaurants reported a recent surge in the cost of fresh vegetables, cooking oil, and beef, as well as higher prices for poultry and dairy.
There is no simple answer to the question of how best to responding to these cost increases, although most respondents would choose a combination of partially absorbing the higher food costs and raising menu prices rather than exclusively do one or the other. About a third of restaurants would remove items from their menus or shop around for lower-cost ingredients.
Raising menu prices is a method that has been repeatedly suggested by some foodservice experts as a tool to help deal with the financial strains of the pandemic.
David Hopkins of consultancy firm The Fifteen Group has been one advocate. He suggests that strategically implementing small price increases can help to preserve operators’ bottom line, would be tolerated by patrons who have shown their desire to support local restaurants, and can also allow for raising wages and more competitive hiring.