Dining out regularly may become less appealing for many Canadians as higher food prices are passed on to them from restaurateurs who have to pay more for basic staples like flour, rice and just about anything needed in their kitchens, say industry insiders.
"Up until recently restaurant owners have been somewhat insulated from rising food costs," says Jill Holroyd, vice-president of research and communications for the Canadian Restaurant and Foodservices Association in Toronto.
"But those days are over and they are starting to feel the impact of higher food costs."
Andrew Laffey, owner of the Hot House Cafe in downtown Toronto, says the first indication that prices are rising is that suppliers are adding fuel surcharges to their deliveries and "some have a flat fee per delivery and are charging so much per case."
"This is not even to do with food prices. It is interconnected with the fuel crisis, and they are all using fuel as the catalyst to increase food prices," he says.
So far, he hasn't seen a decline in reservations - "not at this stage."
Holroyd says that most restaurants, whether they be part of a chain or a big or small operation, have in the past locked into contracts with their suppliers, and once those come up for negotiation the price increases will be passed along.
"At some point menu prices will have to go up to reflect those higher input costs," she says. "When that happens and that varies by type of restaurant, their location and the kind of increases they're seeing in their menu mix."
Among the driving forces of higher commodity prices are fuel costs, which increase the cost of everything from fertilizers to transport to food processing. Rising demand for meat and dairy in rapidly developing countries such as India and China is sending up the cost of grain used for cattle feed as is the demand for raw materials to make biofuels.
Holroyd says this is a difficult time for restaurant owners to raise menu prices "because consumers are seeing more and more of their disposable income being eaten up by the rising cost of food, not to mention gas prices."
"So that leaves them with less disposable income to spend eating out and more sensitive to price increases at restaurants."
Andrew Wong is extremely concerned about the jump in rice prices to use in dishes he and his partner Tom Poirier serve at Wild Rice, their Chinese restaurant in downtown Vancouver.
"All of our suppliers have told us to prepare for price increases starting any time in the next four weeks," says Wong. "The gentleman who brings us our rice noodles says he will have to raise the price June 1."
And although there has not been a drop in the number of customers at the popular eatery, which he describes as serving modern Chinese cuisine, "it's going to make it trickier to stay in business during this period."
Holroyd says that the association hasn't had much reaction from their members "because there are global forces at work here and they are focused on reducing waste and maybe modifying their menus to make it more cost effective for them."
"It's inevitable because they are operating on such thin margins. The average profit margin is only 4.3 per cent of revenue."
One bright spot has been the lower cost of fresh imported produce, Holroyd says.
