Your restaurant tab may leap in 2018 if food prices rise as forecast

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Your restaurant tab may leap in 2018 if food prices rise as forecast

The downtown business crowd packed The Guild on Calgary's Stephen Avenue for lunch on Wednesday, but sometime in 2018, that same meal could cost customers more. 

The seventh annual Canada's Food Price report released earlier this week by researchers from Dalhousie University and the University of Guelph predicts the annual food expenditure for a family of four will grow by $348 to a total of $11,948 in 2018.

Vegetables and restaurant food are forecast to see the highest increase of four to six per cent, which is a big increase from the one to three per cent normally experienced by restaurants.

Patrick Soul, district manager for Calgary's Oliver Bonacini restaurants, including The Guild, said if the report's predictions are accurate, restaurant prices will inevitably climb.

"If I see prices increasing at grocery stores, I'd expect my costs of my inputs vis-à-vis my food, vegetables, and what not, to be going up as well," he said.

Todd Hirsch, chief economist for ATB Financial, agrees.

"They're going to pass it along to consumers with higher menu prices and consumers will probably pay that," he said.

"We've already seen food price inflation, especially on the fresh fruits and vegetables, and I think that pattern will continue."

Hirsch said this will be a challenge for both restaurants and diners.

"Because it does mean more money that they're spending for eating out and probably less money leftover in their pocket, maybe for some of those other discretionary things maybe they'd prefer to be spending money on," he said.

'A perfect storm'

Soul said it's rough for many industries in Alberta right now, and "a perfect storm" of factors — including the increased minimum wage, increased taxation and a struggling economy — isn't making things any easier.

"It puts a lot of pressure on our operations," he said. "I don't think that it's going to be any surprise that prices are going to have to increase sometime in 2018 if we continue to see the pressures we're seeing today."

Despite the challenges, Soul said they're doing what they can to protect customers from price hikes.

"We're finding creative and innovative ways to stretch our dollar," he said.

According to the report, Alberta will also be facing a more competitive marketplace in 2018, which could entice grocers to keep prices low.

"Higher minimum wages will not have an impact on food prices, since most companies are finding innovative ways to cut operating and labour costs and the focus on protecting margins will be enhanced as a result," reads the report.

The minimum wage increases are having an impact on labour spending at grocery stores, though, according to Hirsch.

"We are seeing a lot of grocery stores going to more automated tellers and those things, trying to keep their labour costs down by investing in some new technology," he said.

Hirsch said as a result, grocery stores will likely be able to keep their prices competitive.

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