Restaurants are raising prices and cutting menus to adjust for inflation

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Restaurants are raising prices and cutting menus to adjust for inflation

The pressure on the price of food is very present and the consequences are felt on the price of the menus in the restaurant, to the chagrin of the customers.

Canadian restaurants are raising prices, shrinking menus and cutting hours to survive inflation and labor shortages, says a new report.

The industry continues to struggle financially, the Restaurants Canada report noted. In fact, half of the country's restaurants are operating at a loss or barely breaking even.

With food prices rising, restaurateurs are faced with a dilemma. Many are forced to increase their prices to reflect this increase. But they have to do it without scaring off their customers. Reporting by Jean-Philippe Hughes

According to the report, titled Foodservice Facts, foot traffic to restaurants remains below pre-pandemic levels, with actual sales adjusted for inflation being 11% lower than 2019 results.

Hiring in the restaurant sector is lagging behind the overall job recovery in the country, with a workforce that numbered, as of May, 171 300 fewer workers than before the pandemic.

Backroom positions, such as cooks and other kitchen jobs, have been the hardest to fill. In fact, most restaurants are operating at 80 percent of normal capacity due to labor shortages, the report said.

All of the ingredients for this Red's Diner dish cost the restaurant owner extra.

Menu prices at full-service restaurants are expected to increase 7.8% by the end of 2022, compared to the previous year, and about a third of establishments expect this that prices increase by 15%.

Fast food restaurant menu prices are expected to increase by 7.1% by the end of the year.

Yet price increases are just one way restaurants are responding to inflation, according to the report.

Some establishments are also decreasing the number of items on the menu, reducing portions, changing suppliers and absorbing cost increases, according to the report.

“The A handy solution to dealing with rising food costs is simply to reduce portion sizes.

—Philman George, Business Leader of High Liner Foods

The vicious circle is found in the cumulative effect of labor shortages -work, he said. This gives the customer not only less food for their money, but also a potential decrease in service levels they were accustomed to before the pandemic.

Instead, Mr. George believed that the restaurants that will be successful are those that tackle rising food costs with a multi-pronged approach, including creatively sourcing lower-cost ingredients, and simplifying and reducing menus to reduce food waste.

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