If Canadian restaurants continue to increase menu prices, will residents quit eating out?
Do you consistently eat out? Let’s face it: food tastes good and we need it to survive. And while cooking can be fun or relaxing for some, there are times (more so than not) when dining out or grabbing a quick bite from a nearby restaurant is much more convenient and time saving than slaving over a hot stove.
However, while eating out can be easy and enjoyable, it may no longer be affordable. Originally reported by www.mississauga.com, 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: Tim Hortons continues to successfully build customer trust
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?
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: Will McDonald’s new menu items last?
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.
It seems that the restaurant industry in Canada is going to have to get creativity if everyone is going to end up happy.
For the latest news regarding the food indsutry, take a look at our sister brand Food, Drink & Franchise.