Inflation and the foodservice industry

The last few years have seen a steady and dramatic rise in the cost of food. In January, inflation reached a dramatic 11 per cent, however, global inflation is on the decline, with Germany recording a drop from 22 per cent fourteen months ago to .15 per cent today. Similarly, the United States has seen inflation decline to 2.2 per cent recently.

While most Canadians are still hoping to see decreases in pricing, there are other factors involved, including a new supply chain framework, higher minimum wages, and increased transportation costs. These factors may inhibit the possibility of any further cost savings, even with lower food pricing.

While grocery store prices may continue to drop, inflation has driven up the cost of most restaurant operations, making it more difficult for restaurants to recover from the lingering effects of the pandemic. As Restaurants Canada advocates for governments to “do more than just not increase taxes and fees, but to lower the costs to do business and help operators continue to serve our communities,” operators continue to seek solutions to inflationary challenges.

Higher restaurant prices have surpassed inflated food costs for months, as many operators continue to struggle to make their margins. “When we started to see these initial inflationary pressures start to creep in, restaurateurs were a little nervous to start passing on those increases in costs to the guests,” said Kelly Higginson, president and CEO of Restaurants Canada. But many operators have been “pushed to the brink,” leaving owners no choice, she said.

As patio season approaches, typically offering higher profits for restaurants, Higginson says it may not be enough, with restaurants needing a break from inflationary pressures to boost the bottom line. Operators may need to look at investing in automation and AI to streamline operations, analyze data, and maximize efficiency as they move forward.

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With almost two-thirds of Canadian restaurants operating at a loss or breaking even and continuing high levels of bankruptcy, operators will need to walk a fine line between raising prices so much that it has consumers pushing back, while making their margins and continuing to recover.