A necessary evil? The story behind the unusual price hikes in O [General]
2018 Oct 4
A good read! Restaurateurs spend a lot of energy justifying their prices in terms of offsetting operational and ingredient costs; however, the reality is that they can charge whatever the market will bear and the market (as a whole) doesn't give a hoot about their operational and ingredient costs.
When you think about it, prices should not go up as a direct result of rising operating/food costs. They should go up when the tables are all booked and there are lineups! Operating and food costs should determine profits not menu prices.
A restaurant that is struggling to fill tables has two options: lower prices or increase the desirability of the product. Cutting prices might kill the profitability of the business (although maybe less quickly than raising prices would), so the correct response is to increase the desirability of the product. Easier said than done but seeking feedback is a good start! In most cases, if the owner doesn't genuinely care about serving great food the customers will eventually go elsewhere.
When you think about it, prices should not go up as a direct result of rising operating/food costs. They should go up when the tables are all booked and there are lineups! Operating and food costs should determine profits not menu prices.
A restaurant that is struggling to fill tables has two options: lower prices or increase the desirability of the product. Cutting prices might kill the profitability of the business (although maybe less quickly than raising prices would), so the correct response is to increase the desirability of the product. Easier said than done but seeking feedback is a good start! In most cases, if the owner doesn't genuinely care about serving great food the customers will eventually go elsewhere.
2018 Oct 5
Your argument that operating and food costs should determine profit levels, not menu prices assumes that there is profit to begin with. If the restaurants are already on the bubble, then there might not be much of a choice other than to raise menu costs.
I see both sides of the coin in the sense that I want a thriving restaurant scene, but I can’t afford even casual fine dining anymore.
Cooks are (often literally) criminally underpaid, but paying wages that would keep people in the industry past their 20s would really cause prices to jump.
Is the market so over saturated in Ottawa that we need to see a bunch of restaurants closing?
I see both sides of the coin in the sense that I want a thriving restaurant scene, but I can’t afford even casual fine dining anymore.
Cooks are (often literally) criminally underpaid, but paying wages that would keep people in the industry past their 20s would really cause prices to jump.
Is the market so over saturated in Ottawa that we need to see a bunch of restaurants closing?
2018 Oct 6
The restaurant industry has been hit with cost increases across the board as we all know. Restaurateurs then recoup these costs through menu price increases using a cost based formula. For instance, for a long time, licensed establishments used 30% as their liquor cost. If the price of a bottle of booze went up, then they added a threefold price increase ensuring that their liquor cost remained around 30%. A one dollar cost increase is a three dollar price increase using this formula.
2018 Oct 6
SGM: "Is the market so over saturated in Ottawa that we need to see a bunch of restaurants closing?"
I looked at the number of restaurants in Ottawa back in 2014. See: ottawafoodies.com
Here are my updated results using more accurate population numbers (Ottawa wiki page) and data from The Yellow pages. I think the Yellow Pages listings should give an indication of the number of restaurants in Ottawa and more importantly the changes in the number of restaurants over time.
There are currently 28 restaurant listings per 10,000 people in Ottawa.
Back in 2014 it was 22/10,000.
Between 2014 and 2018 the population increased by 5-6% while the number of restaurant listings per capita increased by 27%.
Conclusion: The number of restaurants per capita grew much faster than the population in the the last 4 years.
When will we have more restaurants than the market can support ?
I was wrong with my predictions back in 2014, so I'm out of the prediction business.
I looked at the number of restaurants in Ottawa back in 2014. See: ottawafoodies.com
Here are my updated results using more accurate population numbers (Ottawa wiki page) and data from The Yellow pages. I think the Yellow Pages listings should give an indication of the number of restaurants in Ottawa and more importantly the changes in the number of restaurants over time.
There are currently 28 restaurant listings per 10,000 people in Ottawa.
Back in 2014 it was 22/10,000.
Between 2014 and 2018 the population increased by 5-6% while the number of restaurant listings per capita increased by 27%.
Conclusion: The number of restaurants per capita grew much faster than the population in the the last 4 years.
When will we have more restaurants than the market can support ?
I was wrong with my predictions back in 2014, so I'm out of the prediction business.
butwhoami
ottawacitizen.com