Restaurants Grapple with Rising Menu Prices Food Costs Amid COVID-19 Pandemic

Restaurants across the country have been grappling with rising food prices since the start of the COVID-19 pandemic, but for Blair Lebsack, some of the most shocking increases have been for his restaurant’s less flashy ingredients.

Before the pandemic, a 16-litre container of canola oil for his Edmonton restaurant RGE RD would cost $18, he said. Now they go for anywhere between $29 to $32 for the same amount.

“It adds up really quickly,” Lebsack said in an interview.

High shipping rates, delays and increases in grain costs have sent food prices soaring for restaurants already hurt by pandemic restrictions and closures.

Restaurants Canada’s James Rilett said restaurants are a low-margin industry, so there’s not a lot of room to work in additional costs.

“It’s pretty bad. We won’t have an idea of how bad until most provinces get reopened,” Rilett said.

A survey by Restaurants Canada found food costs are one of the top three challenges restaurants are facing along with additional shutdowns and pandemic-related debt.

Rilett, Central Canada vice-president at Restaurants Canada, said while most restaurant owners will try to delay menu increases for as long as possible, he expects customers will face higher prices.

The pandemic’s effects on food prices have been far-reaching, impacting the entire supply chain, according to Canada’s Food Price Report.

“I think last year when the pandemic hit, the food industry was somewhat protecting the consumer. Prices did go up last year but (the industry) did absorb some of the shock created by the pandemic,” said Sylvain Charlebois, lead author of the report and director of the Agri-Food Analytics Lab at Dalhousie University.

However, the food price report predicts there’ll be a five percent increase in prices this year, up from a three percent increase in 2020, he added.

“Some people may say ‘Well, it’s five percent, what’s the big deal?”’ he said. “But five percent is quite significant because food inflation is not a game of averages.”

According to monthly average retail price data from Statistics Canada, between January 2020 to May 2021, the average price of a kilogram prime rib roast went up almost 12 percent. The price of 200 grams of instant coffee rose nearly 15 percent.

Charlebois also noted that shipping costs have had a significant impact on Canada’s food prices and have tripled in the last year. And like Rilett, he expects restaurants will raise their prices to make up for the increased costs and may even make cuts to their menus to reduce the amount spent on food.

One way for restaurants to lessen the blow of higher costs has been to get supplies from local sources.

Lebsack said he has about two years’ worth of animals being bred for RGE RD by local farms which are helping the restaurant avoid industrial farming prices.

“The closer we can work with our food and our neighbours, our community, the tighter we can keep our costs,” Lebsack said.

And the saving grace for the country’s restaurants may be the pent-up demand as diners head out for the first time after months of cooking at home and takeout meals.

Lebsack said he’s already seeing his customers excited to get back to the brick-and-mortar dining experience.

“The only really good thing coming out of this is how much people have missed restaurants,” Lebsack said.

“I think once people digest that everything has gone up in price, I think they’ll be coming back out again and making it worthwhile for us to be in business.”

This post is also available in: English

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