rising food costs

Taking a closer look at rising food costs

Rising food costs have been in the news for months, with consumers, grocers, and restauranteurs continuing to feel the pinch. In an effort to combat the continued inflation and offset restaurant costs, U.S. menu prices jumped 7.6 per cent in July, just a slight decrease from June’s 40-year high.

Though there has been a recent dip in inflation (largely attributed to gas prices), the decline does not seem to have affected food costs.

Which items have seen the biggest price hikes? Canadian Grocer breaks it down nicely:

  • fats and oils (+25 per cent)
  • pasta (+ 20 per cent)
  • butter (+17.3 per cent)
  • oranges (+ 16.9 per cent)
  • eggs (+ 15.8 per cent),
  • bread products (+ 15.4 per cent)
  • canned and prepared vegetables (+ 15.4 per cent)
  • lettuce (+ 14.2 per cent)
  • coffee and tea (+13.8 per cent)
  • tomatoes (+13.3 per cent)

With such a broad range of products affected, many restaurants have been forced to adjust their menus to keep prices low and to accommodate shortages. Restaurants like Good Food on Moffett have removed six of the 22 dishes from their menu, with chef Andrew Alexander saying, “I am worried about ordering a bunch of food and sitting on a bunch of money”.

This has been a challenge across the industry, from fine dining to fast food, with restauranteurs tackling this issue with a combination of raising prices, adjusting menus, and finding creative solutions. Domino’s Pizza raised the price of their delivery deal from $5.99 to $6.99 and Burger King removed the Whopper from its Value Meal altogether. Some companies, like McDonald’s, have added incentives when guests use their app, to try and boost the number of visits while providing better value to the customer.

Unfortunately, there’s no light at the end of the tunnel just yet. “This period of inflation could end by the middle of 2023,” predicts Art Hogan, managing director and chief market strategist at B. Riley Financial.  

Keeping a watchful eye on specific food costs to tweak menus and adjust prices in the coming months will help restaurants better manage their budgets and boost their bottom lines.