Restaurants usher in higher prices, smaller portion sizes as costs rise, report says

TORONTO — A new report says restaurants in Canada are raising prices, shrinking menus and reducing hours in a bid to survive inflation and labour shortages. 

The Restaurants Canada report says the industry is continuing to struggle financially, with half the country’s eateries operating at a loss or just breaking even.

The report, entitled Foodservice Facts, says foot traffic to restaurants is still below pre-pandemic levels with real sales adjusted for inflation 11 per cent under 2019 results. 

It found hiring in the restaurant sector is lagging Canada’s overall job recovery, with the workforce 171,300 jobs short of pre-pandemic levels as of May. 

The report says back-of-house positions such as cooks and other kitchen jobs have been the hardest to fill, with most restaurants operating at 80 per cent of their normal capacity due to the worker shortage. 

It says menu prices at full-service restaurants are expected to rise 7.8 per cent by the end of 2022 compared with the year before, with about a third expecting prices to climb by as much as 15 per cent.

Menu prices at fast-food restaurants are expected to increase 7.1 per cent by the end of the year.

Still, higher prices are just one way restaurants are responding to inflation, the report said. 

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

“The low-hanging fruit for addressing rising food costs is to simply cut back on portion sizes,” Philman George, corporate chef of High Liner Foods, said in the report. 

“The catch-22 is the compounding effect of labour shortages,” he said. “It leaves the customer not only getting less food for their dollar, but also a potential decrease in the service levels they were accustomed to receiving pre-pandemic.” 

Instead, George said successful restaurants will address rising food costs with a “multi-prong approach,” including creative sourcing of lower-cost ingredients and making menus simpler and shorter to reduce food waste.

This report by The Canadian Press was first published Sept. 16, 2022.

The Canadian Press