Restaurant owners say rising minimum wage and rising costs explain menu price hikes


“We need to figure out what the market will bear and not shock consumers too much.”

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If you thought the $155 Harmons Steakhouse charged last fall for its eight-ounce Miyazaki Wagyu A5 Striploin was sky-high, brace yourself.

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Four months later, that world-class cut of meat at the upscale Elgin restaurant is now nearly $200.

Peter McCallum, majority owner of the Whalesbone <a class=Restaurant Group, which includes Harmons, said Peter McCallum, majority owner of the Whalesbone Restaurant Group, says beef prices have risen 40% since Harmons opened in September.” class=”embedded-image__image lazyload” src=”https://smartcdn.gprod.postmedia.digital/ottawacitizen/wp-content/uploads/2022/03/ottfoodjan21.jpg?quality=90&strip=all&w=288″ srcset=”https://smartcdn.gprod.postmedia.digital/ottawacitizen/wp-content/uploads/2022/03/ottfoodjan21.jpg?quality=90&strip=all&w=288, https://smartcdn.gprod.postmedia.digital/ottawacitizen/wp-content/uploads/2022/03/ottfoodjan21.jpg?quality=90&strip=all&w=576 2x” height=”300″ loading=”lazy” width=”400″/>
Peter McCallum, majority owner of the Whalesbone Restaurant Group, which includes Harmons, said Peter McCallum, majority owner of the Whalesbone Restaurant Group, says beef prices have risen 40% since Harmons opened in September. Photo by Tony Caldwell /Postmedia

“Honstally, we have always been hesitant to raise pricessays Peter McCallum, majority owner of the Whalesbone restaurant group, which includes Harmons.

But since Harmons opened in September, beef prices have risen 40%, McCallum points out. And, with gasoline prices soaring, beef prices move in tandem because “the cattle industry depends on the fuel industry.”

It’s not just Ottawa’s fine dining luxuries that have become more expensive. While premium steaks are probably the most extreme example, everything from ramen and Caesar salads to kebabs and Thai curries may well cost more soon, if their prices haven’t already gone up.

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On the one hand, restaurants, hampered for two years by COVID-19 public health measures, are planning something resembling normality with the return of unmasked customers from next Monday, about a month after the companies have been able to open dining rooms at full capacity.

At the same time, restaurants continue to face soaring expenses due to a host of factors, the most significant of which is the impact of the Ontario government’s January 1 minimum wage increase. , supply chain issues and inflation.

While restaurants are still wary of pushing customers away with price increases, at this point, as Elias Pappadolias, owner of the Brig Pub in the ByWard Market, puts it, “There will be a sticker shock.

Pappadolias raised prices last month by up to 10%, which he said “isn’t as much as I’ve seen other places do”.

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McCallum says prices rose at the Whalesbone Group’s four restaurants earlier this year in response to the minimum wage hike.

This factor is also a priority for Pappadolias. He adds that Premier Doug Ford’s decision to increase the minimum wage for servers follows a similar move by his predecessor, Kathleen Wynne.

I would challenge any industry to absorb a 40% increase. 100 of its labor costs in four years. It’s unbearable,” says Pappadolias.

Like McCallum, Pappadolias cites rising ingredient costs as a major misfortune.

We run around romaine lettuce,” Pappadolias offers when asked for an example. Despite a 40% increase in the cost of romaine, Pappadolias says he’s trying to hold the line on associated menu prices, at least for now.

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I have to stay a little optimistic. Let’s hope the price goes down,” he says.

However, the price of steak and fries at the Pappadolias pub has risen from $30 to $36.95, he says, because the certified Angus beef “went crazy”.

McCallumsYes, he was hesitant to raise prices at his restaurants, and January’s increase was the first in over a year.

“We are already considered expensive restaurants and we don’t want to scare people off any further,” he says.

McCallum defends his $200 steak by explaining that, at Harmons, food costs make up 45% of his budget, compared to an industry standard of around 33%.

“Charging what we would like to charge would lose us the market,” he says.

“You can make a better margin being a pizzeria or a pasta restaurant. These are cheaper-to-serve items,” McCallum says.

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Joelle Parenteau, owner of Wolf Down, said her decision to raise doner kebab prices was prompted by months and months of financial statements showing food costs were rising while profit margins were shrinking.
Joelle Parenteau, owner of Wolf Down, said her decision to raise doner kebab prices was prompted by months and months of financial statements showing food costs were rising while profit margins were shrinking. Photo by Tony Caldwell /Postmedia

But owners of more casual restaurants also say they have no choice but to raise prices.

Even then, Joelle Parenteau, owner of the downtown casual restaurant Wolf Down, says the increase in menu prices is not keeping up with increased spending.

“To get back to pre-COVID margins, you would have to increase even further,” she says. “We need to figure out what the market will bear and not shock consumers too much.”

This week, Wolf Down raised the price of its delivered kebabs by $1, to $15.50 from $14.50. Parenteau says she left the price of kebabs in store at $12.50, but figures out people who get their food delivered”want added value and are a little less price sensitive.

Her decision, she says, was prompted by months and months of financial statements showing that the cost of food was rising while profit margins were shrinking.

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“You look at the numbers and they speak for themselves,” she says. “We had to do something.”

Jason Matsubara, managing partner of the Toronto-based Ramen Isshin chain, which includes a location in Ottawa, says his company was recently forced to raise ramen prices by an average of $1.

Not only at Ramen Isshin, but also at Akachan and Paper Tiger Noodle Bar, two other new ramen-centric eateries, hearty bowls of Japanese soup start at $17.

“It’s 100% the result of the increase in the minimum wage and the cost of food,” says Matsubara. “On average, our food costs have increased by 15% and even up to 40%.

Meanwhile, supply chain issues have forced them to scramble for the past two years to source ingredients from Japan, Matsubara says.

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In all fairness, some of the food costs of our most expensive ramen are so high now that these ramen should be priced above $20, but we’ve withheld $19.80,” he says.

“I can’t imagine selling a ramen for more than $20, but I think it’s coming, if gas prices keep going up.”

When Pookie’s Thai on Carling Avenue reopens its dining room on April 1 for the first time since the pandemic began in 2020, some prices will go up a dollar, owner Pookie McGowan said.

She singles out curries that require coconut milk, stir-fries with beef, and noodle dishes, because all of those ingredients have skyrocketed. Plus, 20 kilograms of rice nearly doubled in price, as did spring roll wrappers, McGowan says.

The small restaurant in a small, isolated strip mall, which was already very lean on staff, was only able to survive the pandemic by turning to take-out and selling pantry items such than pad thai and dipping sauces, says McGowan.

Because customers in neighboring neighborhoods have been so loyal, McGowan says she has resisted a more drastic or widespread price increase.

“Pookie worries about older and less well-off customers,” adds her husband, Blair McGowan.

“Our business is stable, but no one is getting rich here,” he says.

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