If you’ve felt like the cost of going out to a bar or restaurant has increased, you’re likely onto something, with a vast majority of Canadian restaurant operators saying they’ve raised their menu prices over the last year.
The inaugural Hospitality Operator Report from EconoLease was completed in conjunction with Leger, surveying 250 Canadian foodservice and hospitality operators on what it actually costs to open and run a business today, where the pressure is concentrated, and how operators feel about the year ahead.
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The rising costs of goods were paramount for many operators, with respondents saying food and beverage costs (64 per cent) have increased most significantly, followed by labour and wages (55 per cent), and rent and occupancy (32 per cent). A quarter (25 per cent) report an increase in equipment maintenance and repair costs. A staggering eight-in-ten (80 per cent) have raised menu prices in the past 12 months. Half of them (49 per cent) plan to raise them again in the next 12 months.
The report found that those located in the West (B.C., Alberta, Manitoba, Saskatchewan) are more likely to have raised prices in the past 12 months, while those in Ontario have not, but are planning to do so in the next 12 months.
Two-fifths estimate that their overall costs have increased by 5-10 per cent (40 per cent) or 11 per cent to 20 per cent (38 per cent) over the past 12 months.
Despite eight-in-ten respondents saying they’ve raised menu prices, that is not being reflected in everyone’s profit margins, with just 42 per cent reporting an improvement over the past 12 months. Most (33 per cent) report only a slight improvement. A further 24 per cent say margins have stayed the same. A quarter (27 per cent) report that margins have declined.
The report also found that labour pressure was higher in Canada than in the U.S., at 55 per cent compared to 35 per cent. Canadian respondents were also more likely to have raised menu prices in the past 12 months (80 per cent vs. 68 per cent).
Looking forward to the next 12 months, rising food and beverage costs are especially likely to be mentioned as a threat by those operating fast casual restaurants, while those operating full-service casual dining restaurants are more likely to mention labour shortages/rising wages and declining consumer spending.
You can view the full report online.
Have you noticed prices spiking at any Canadian restaurants you have visited lately? Let us know in the comments.