Just this month, the Canadian dollar dropped to an unprecedented low, reaching 69 cents U.S. for the first time in about a decade. Some forecasters even predict the value of the loonie will continue to drop as much as 10 cents to reach a record low of 59 cents U.S. by the end of the year. But what does this mean for the foodservice industry?
The decreasing value of the Canadian dollar is driving food costs up. As a result, consumers have been feeling the sting of quickly rising prices at the grocery store, and grocery-store operators see no slowing in sight. As roughly 80% of all fresh fruits and vegetables in Canada are imported, produce prices are particularly susceptible to the changing currency rates. Meat, fish, dairy, eggs and grains are also expected to increase in cost in 2016. Normally, high prices at the grocery store may seem like a reason for consumers to turn to dining out. However, restaurant operators are facing a similar set of problems due to these tumultuous food prices.
A majority of restaurants plan to raise menu prices in the first half of 2016. These adjusted price points are a necessity for many operators looking to avoid a deficit due to the strong inflation of fresh foods. There is a fine line when it comes to adjusting menus, however. Operators must be weary of continually boosting prices to counteract food overheads as consumers will only put up with so much. Eventually, consumers will hit their limit and operators will need to turn to new strategies for cutting costs.
One way for operators to combat rising food costs is through support of a “buy Canadian” movement. Chefs who spotlight locally sourced, seasonal ingredients will find themselves impacted less by these financial strains, compared to those who import exotic foods or serve dishes made with off-season ingredients. Not only will this strategy help keep menu prices down, it will also appeal to consumers’ continuing demands for fresh, high-quality offerings.