Operators & Guests Respond to Rising Costs
by David Klemt
Everything is more expensive these days and both operators and consumers have their own ideas for addressing rising costs.
To gather and share insight into people’s mindsets, Restaurants Canada conducted and commissioned two surveys.
For one, the industry research and advocacy organization surveyed operators. The focus was on how much operators anticipated increasing their prices.
On the other side, Restaurants Canada commissioned Angus Reid for a survey focusing on consumers. This survey revealed potential traffic slowdowns and perceived value for money.
For your own copy of Restaurant Canada’s 2022 Foodservice Facts report, click here.
QSR vs. FSR: Consumers
As an operator, converting first-time visitors into repeat guests is paramount. Equally as important: increasing visit frequency per guest.
Of course, an immediate byproduct of rising costs is consumers pulling back and reevaluating their spending. Oftentimes, dining out is one of the first costs consumers slash in order to save money.
Therefore, operators always face the risk of reduced traffic and even losing some guests permanently when they raise prices. However, this is often a necessary risk to take to combat rising costs.
So, how dire is the situation among Canadian consumers currently? Or at least, how did they feel in Q2 of this year? Angus Reid conducted a survey of consumers to find out, and the results can be found within the 2022 Foodservice Facts report.
First, let’s look at visit frequency for QSRs and FSRs. Before we begin, 12 percent of survey respondents answer that they “don’t know for sure” if rising prices will affect their visit frequency for either QSRs or FSRs. Not helpful.
For QSRs, 19 percent of respondents say an increase in prices won’t impact their visit frequency. Thirty-six percent anticipate visiting “a little less often,” while 32 percent will visit much frequently.
As for FSRs, 16 percent of survey respondents won’t change their visit frequency. However, 37 percent anticipate visiting FSRs much less often. Nearly as many, 36 percent, will visit a bit less frequently.
Interestingly, however, is perceived value. More FSR guests believe they receive excellent or good value for their money than they do from QSRs. More QSR guests believe they receive fair, poor, or very poor value for their money.
Overall, though, 90 percent of Canadian consumers feel positive toward the value they receive from QSRs and FSRs.
QSR vs. FSR: Operators
Clearly, it’s good news that the vast majority of Canadians believe they receive good value for their money when dining out.
Nobody enjoys paying more but it appears that both QSRs and FSRs in Canada can increase their prices. At least, they can do so for now while consumers are mostly understanding about inflation.
Restaurants Canada asked QSR and FSR operators a simple but revealing question for their 2022 Foodservice Facts report. The question? How much higher do operators expect to increase their prices by the end of Q4 of this year in comparison to last year?
The majority of operators in both categories anticipate they’ll increase menu prices by more than seven percent. Twenty-seven percent of QSR operators have that expectation. That number rises to 35 percent for FSR operators.
Twenty-two percent of QSR operators anticipate raising prices five to seven percent before the end of 2022. In comparison, 32 percent of FSR operators expect to raise prices in the same range.
At the moment, Canadian consumers appear to be willing to endure these increases. However, it’s likely they expect prices to drop back to “normal” (pre-pandemic prices) or close to it sometime in 2023. That is, unless Canada slides into recession.