Restaurants in Canada raise menu prices - Will customers be lost?

By Admin
If you enjoy eating out at restaurants, then you may be in for a rude awakening. While eating out can be fun, enjoyable and delicious, it may no longer...

If you enjoy eating out at restaurants, then you may be in for a rude awakening. While eating out can be fun, enjoyable and delicious, it may no longer be affordable. An increase in menu prices is on the horizon, an increase that may determine where and what you eat.

Originally reported by our sister brand Business Review Canada and, 54 per cent of restaurants in Canada are expected to raise menu prices within the next six months. But if this raise really does take place, will residents quit eating out? And if so, what will happen to the overall restaurant industry?

RELATED TOPIC: Canada invests in modernization for Ontario Frito-Lay plant  

Because the prices of groceries have increased throughout Canada, the prices of items on restaurant menus will follow suit.

Specifically, Restaurants Canada suggests that 65 per cent of the country’s eateries have reported their food budgets are higher than they were at this time last year due the rising prices of beef, pork and produce, which in turn has led to profit margins taking a hit.

Therefore, the 54 per cent increase in menu prices is expected to take place. And while this may not seem fair, it can be argued that the price raise in understandable: everyone—no matter what industry—needs to make a profit.

Regarding the issue, a spokeswoman for the industry had this to say: “Restaurants don’t make such decisions lightly, since price increases are an almost surefire way to keep business way.”

But will customers really stay away from restaurants and choose to eat at home?

RELATED TOPIC: Popular meal replacement comes to Canada—Success not likely

Obviously, it’s hard to say what will happen to each individual restaurant until the price increase actually goes into effect. However, some suffering is more than likely to take place.

“It’s an extremely competitive industry, and they have very price-resistant customers,” Reynolds said. “When they try to increase their prices, they find that customers aren’t willing to pay them.”

If this is the case, customers then have two choices: find another venue or eat at home.

 Most likely, if someone wants to eat out, then they will. After all, if an individual is choosing a restaurant to save time and convenience, then cooking may not be an option—even if the task is a little cheaper. He or she may just find a different restaurant that offers lower menu prices.

Therefore, it will be important for restaurants to become familiar with their competition. At a time when restaurants are raising their prices, owners can follow majority, do the same and risk losing clients—or try to appease current customers, keep menu items the same and risk losing some profit.    

RELATED TOPIC: Franchise growth is slowing down in Canada

At the end of the day, restaurant executives need to do what’s best for their team and their industry. Profits may be lost if menu items aren’t raised to reflect the increase in beef, pork and produce. However, customers may be lost (i.e. profit) if a menu raise does take place.

If Canadian restaurants want to make a profit and still keep their loyal customers, they may need to come up with a new strategy or two that will allow all parties involved to be happy and content--or someone may be left feeling hungry. 

RELATED TOPIC: How restaurants and chains are cooking up savings


Let's connect!   

Check out the latest edition of Food Drink & Franchise!


Featured Articles

Mars Wrigley 'Fanatical' about Sustainability – CPO Davies

Mars Wrigley Chief Procurement and Sustainability Officer Amanda Davies on how it excels in strategic sourcing and is 'fanatical' about sustainability

McKinsey: Inflation Hurting European Grocery Sector

McKinsey report on State of Grocery Europe 2024 shows high prices are dampening consumer spending and margins are being squeezed by rising costs

Mars and FAO Food Safety Partnership Targets Mycotoxins

Mars & UN’s Food and Agriculture Organisation act on standards in food production, labelling and safety, with focus on mycotoxins in maize supply chain

Kraft Heinz Eyes $170mn US Government Net Zero Grant


Danone’s Global Strategic Partnerships Boost Growth


Mondelez & Hershey facing Easter Cocoa Crisis