Let's be honest, $25 for breakfast, a pizza for $30, a burger for $28, it's become ridiculously expensive to eat out!
More and more Quebecers are asking themselves: Are restaurants lining their pockets at our expense?
The answer is not that simple.
Customers say: this makes no sense!
For many people, going out to eat has become an expense to think about.
We often hear:- Before, we went to restaurants 2-3 times a week and now it's a maximum of once every two weeks
- Portions are getting smaller and prices keep rising
- Restaurants blame the pandemic, but that's over and prices aren't coming down
- With taxes and tips, the total to pay is way too high
And whether we like it or not, that's pretty much true. So it gives the impression of paying too much for what we receive.
Restaurant owners say: we do everything to stay open!
Now, if we put ourselves in the shoes of the restaurant owner, the reality is far from simple.
Since the pandemic, all costs have skyrocketed.
Meat, oil, fresh produce, and many others have jumped by several percent!
It is very difficult to have good stable employees who want to work in a restaurant, so salaries must be increased to keep them.
As real estate has also surged, commercial rents have seen significant increases.
Which restaurant can afford not to be on platforms like Uber Eats or DoorDash right now? Commissions are between 15 and 30%!
Add to that electricity, gas, insurance, permits, maintenance... All of that has also skyrocketed!
In short, everything costs more.
How much goes into the restaurant's pockets?
We are starting to see what is really happening. Contrary to what many think, a restaurant does not make 30% profit.
The reality? Between 3 and 10% profit margin, depending on the type of restaurant, and that’s if everything is well managed!
Some manage to barely cover their expenses, while others have less income than expenses and try to recover for several months.
And guess what? Some restaurants are full and still struggling.
There are so many factors that can eat away at the already very thin profit margin, here are some examples:- A group that had reserved doesn't show up and we had brought in extra employees
- Equipment like an oven or fridge breaks down and we have to call a repairman
- There’s a week of cold or intense rain
- For 2 weeks, lettuce jumps from $15 to $50 a case
Shock of realities
So the customer says: It's too expensive! They are exaggerating! I'm going to go less often.
The restaurant owner thinks: If I don't raise my prices, I will have to close! If I raise my prices too much, I will lose customers!
We are a bit at an impasse...
Why are so many restaurants closing?
We talk about 3 out of 10 restaurants closing in the first year and more than 50% not making it to their fifth anniversary.
The debts from the pandemic have been an aggravating factor in recent years, but the current model of a restaurant with a dining room and table service is becoming increasingly difficult to maintain.
There are too many costs, not enough profit margin, and customers spending less or going to restaurants where the bill is lower, even if the quality is often lower.
What strategies do surviving restaurants use?
To stay open, here’s what some restaurants have to implement:- Remove table service
- Slightly reduce portions to avoid raising prices
- Offer “healthy” portions to display a low price
- Offer a menu with fewer choices, thus with a smaller inventory.
- Regularly adjust menu prices with small increases
- No longer include certain items on plates and offer them as extras
- Use slightly lower quality products for the same selling price
Is this abuse? It depends on how you see it, but for a restaurant owner, it’s a matter of survival.
And you, what do you think of all this?
- Do you think restaurants are abusing prices?- Do you go out to eat less often than before?
- Would you be willing to pay a little more to support local restaurants?
Let us know in the comments, we need to talk about it.
