Menu prices at restaurants in Canada were 3.1% higher in July 2021 compared to a year ago. This represents the biggest increase since January 2019. By contrast, food prices at grocery stores rose by 1.0%.
By segment, quick-service restaurants reported a 3.3% increase in menu prices in July compared to a 2.9% increase at full-service restaurants.
The increase in menu prices is the result of higher overall operating expenses (cost of sales, labour, other expenses). A survey of Restaurants Canada’s members found that the foodservice operators are seeing significant cost pressures as the price of a number of key ingredients have increased dramatically. Seven in 10 restaurants reported a recent surge in the cost of fresh vegetables, cooking oil and beef. Higher prices for poultry and dairy are also having a negative impact on restaurants.
In response to these price increases, Restaurants Canada asked foodservice operators to identify how they are responding to these cost increases. There was no simple one-size-fits-all answer. Most would choose a combination of partially absorbing the higher food costs and raising menu prices rather than exclusively do one or the other. For about a third of restaurants, they would remove items from their menus or shop around for lower-cost ingredients.
For more information, click here for Restaurants Canada’s Q2 2021 Restaurant Outlook Survey.