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Steaks are high

Rising food, labour costs force restaurants to raise prices

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Chef Fraser MacLeod of 529 Wellington carries the Tour de Beef, an assortment of prime cuts of beef, lamb and veal.


Chef Fraser MacLeod of 529 Wellington carries the Tour de Beef, an assortment of prime cuts of beef, lamb and veal. Photo Store

It's enough to make a carnivore cry.

Not only are local meat lovers paying through the nose for beef at the supermarket -- Statistics Canada said Friday store prices are up 10 per cent since the start of the year -- they're also forking out more for a steak at many local restaurants.

And they're likely looking at further price increases in the coming months.

A recent national survey by the Canadian Restaurant and Foodservices Association found 62 per cent of Canadian restaurant operators expect to raise menu prices during the next six months to offset the soaring cost of beef and other key food items. That's up from 33 per cent in the third quarter of last year and 59 per cent in the first quarter of 2014.

"So I think it would be fair to say that consumers across the country, including here in Manitoba, can expect to see menu prices increase over the next six months in many of the restaurants they frequent," said Dwayne Marling, the association's vice-president for the Manitoba-Saskatchewan region.

Marling isn't the only one who predicts price increases.

'Everything is going up in price. It's a problem in general'

-- Fusion Grill owner Scot McTaggart

"It would be something (restaurant operators) would think long and hard about," said Scott Jocelyn, executive director of the Manitoba Restaurant and Foodservices Association. "But you can't keep absorbing these cost increases. As costs continue to rise, you have to pass some of them along to your customers."

Jocelyn noted another one of a restaurant operator's biggest expenses -- labour costs -- will also rise this fall with the government's announcement this week that the provincial minimum wage will climb by 25 cents to $10.70 an hour as of Oct. 1.

"That's not good news (for restaurant operators)," Jocelyn said, adding it will put further pressure on them to raise prices.

On the food side, the Statistics Canada numbers also show it's not just beef prices that have been on a tear since the start of the year. The store price for fresh or frozen pork jumped 12.2 per cent from Jan. 1 to May 31, while fresh or frozen chicken prices rose by a more modest 0.5 per cent. Canadians also paid 5.3 per cent more for store-bought fresh vegetables, and 5.6 per cent more for fresh fruit.

None of that is news to Fusion Grill owner Scot McTaggart, who's painfully aware of the escalation in food prices.

"Everything is going up in price," McTaggart said. "It's a problem in general."

For McTaggart and the owners of two other local fine-dining restaurants -- 529 Wellington and Hermanos -- the biggest challenge has been the soaring cost of premium cuts of beef.

Hermanos owner Noel Bernier estimates they've soared by 30 per cent in 12 months, and are now 50 to 60 per cent higher than the prices of some lower quality cuts of beef. He, McTaggart, and 529 Wellington managing partner Jim Armstrong said their chefs have tried to offset that by getting creative with menu offerings.

"You have to have a great chef who can take a secondary cut (of beef)... and still turn it into a great dinner," McTaggart said. "We try to use the best ingredients we can at the best prices we can without sacrificing quality."

At the request of its customers, 529 Wellington has added smaller (six-ounce) steaks to its menu, Armstrong said. It's also experimenting with adding other less expensive meat dishes, including a premium pork loin and some chicken entrees, and expanding its fish and seafood offerings.

Although McTaggart and Bernier said they've already raised the prices of some of their premium beef dishes, Armstrong said 529 has managed to hold the line on price increases for the last four years. It's hoping to continue doing so until beef prices come down, although he admitted that may not be possible.

Bernier, who is also owner or co-owner of a number of other local restaurants, including Carnaval Brazilian BBQ Restaurant and Prairie 360, said their restaurant management firm -- FB Hospitality Inc. -- hopes to hold off on any further price hikes until it sees if meat prices come down once the summer barbecuing season is over.

But Barry Rooney, a sales and marketing specialist with local meat distributor To-Le-Do Foodservices, isn't holding his breath.

Rooney said a North America-wide shortage of beef, brought on by drought in parts of the United States and soaring feed costs, has driven beef prices to record-high levels. It's going to take several years to build herds back up to where they should be, he added.

He said the only thing that might push down prices is a significant drop in demand. But he hasn't seen any signs of that happening, he added.

Marling and Jocelyn said one saving grace for restaurants is that most consumers seem to understand they aren't raising menu prices just to pad their bottom line.

"I think when people go to the grocery store and see (beef) prices are increasing, they know we're not manufacturing this on our own," Jocelyn added.

Republished from the Winnipeg Free Press print edition June 21, 2014 B6

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