Restaurant menu prices in Canada were 3.1% higher in July 2021 than they were a year ago, Restaurants Canada reports.
This is the largest increase since January 2019 and more than three times the magnitude of the increase in food prices in grocery stores, which rose 1.0%.
Since January 2019, menu price inflation had only exceeded three percent in a month until July 2021. So far, in 2021, the figure has hovered between 2.5 and 2.9 percent.
By segment, quick-service restaurants were slightly ahead of their full-service counterparts, with QSR menu prices rising 3.3%, compared with a 2.9% increase for FSRs.
Restaurants Canada suggests that the increase in menu prices is the result of higher overall operating expenses, including cost of sales, labor and other expenses.
A survey of members of the organization found that foodservice operators are under significant cost pressure as the prices of a number of key ingredients have risen dramatically. In particular, seven in ten restaurants reported a recent spike in the cost of fresh vegetables, cooking oil and beef, as well as higher prices for poultry and dairy products.
There is no simple answer to the question of how best to respond to these cost increases, although most respondents would choose a combination of partially absorbing higher food costs and increasing menu prices. rather than doing one or the other exclusively. About a third of restaurants would remove items from their menus or seek out lower-cost ingredients.
Raising menu prices is a method that has been repeatedly suggested by some restaurant experts as a tool to help deal with the financial strains of the pandemic.
David Hopkins of the consultancy firm The Fifteen Group has been one of the advocates. He suggests that the strategic implementation of small price increases may help preserve operator bottom lines, would be tolerated by customers who have shown a desire to support local restaurants, and may also result in higher wages and more hiring. competitive.