By Chris Elliott, Senior Economist (Oct. 28/15) Many of you are reluctant to raise menu prices, but you told us higher food and labour costs don’t give you much of a choice. According to Restaurants Canada’s latest Restaurant Outlook Survey, a record 60% of you plan to increase your menu prices over the next six months. That’s the highest share since Restaurants Canada began the survey in 2011.
Menu prices already increased 2.8% in the first eight months of 2015 due to rising operating costs. Compared to a year ago, the costs of meat, fruit and vegetables have risen sharply. Food costs at the average restaurant increased 4.3% on a year-over-year basis. And minimum wages were hiked in nine out of ten provinces in 2015. All of this cuts into your bottom line.
Since food and labour make up the biggest piece of your costs, it’s no surprise they’re your top two concerns. Seventy-five percent of you said rising food costs had a negative impact on your business in Q3, up from 66% in Q2. Labour costs are a significant issue for 73% of you. In Alberta, 85% of you are concerned about rising labour costs, given the recent announcement to increase the minimum wage to $15 an hour by 2018.
Despite these higher costs, you told us you’re nervous about increasing menu prices because of escalating competition and price-sensitive consumers. Based on the 2015-2016 Restaurant Industry Forecast, Restaurants Canada is forecasting menu prices to climb by 2.5% in 2016.
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