If you’re a self-proclaimed cheese addict, be prepared to spend a little more on your restaurant tab.
You can thank the country’s rising dairy costs.
This year’s second industrial milk price increase is set to take effect tomorrow – something frustrated restaurateurs say will lead to higher food prices.
In July, the Canadian Dairy Commission (CDC) decided to raise the price of industrial milk by 2.76 per cent. This is on top of the 2.2 per cent price hike imposed in February, marking the first time the CDC has increased prices twice in one year since 2008.
Industrial milk is processed into yogurt, ice cream, cheese and butter, making it an essential ingredient for many restaurants.
According to The Canadian Press, the latest hike is in response to what Benoit Basillais, CDC’s chief of policy and economics, calls a “very unique and unexpected situation.” He said that producer revenues “decreased rapidly” last fall, partially due to a decrease in global demand from importing countries and changing consumer tastes.
Despite hopeful expectations, revenues didn’t stabilize by spring.
Basillais says the increase will alleviate the producers’ financial stress and ensure the high demand for dairy products in the fall is met. He called the move “an advance” of the CDC’s December price decision for next year.
While the move may benefit farmers, the country’s restaurant owners are faced with the decision as whether to raise prices on dairy-heavy products or to absorb the costs themselves.
That, or to remove certain items from the menu.
Of course, it’s already a struggle for restaurants – both new and long established – to stay afloat in today’s economy and foodie culture that seems to offer limitless options.
According to Statistics Canada, the operating profit margin for food services and drinking places was 4.2 per cent.
Just how much of a price difference to expect is difficult to predict, according to Basillais, as it depends on how much of the final product is made up of the dairy component. He said other factors like transportation, packaging, and processing costs also need to be accounted for.
He did say that customers shouldn’t expect price hikes to be more than 2.76 per cent.
When it comes down to it, we’re pretty sure fellow cheese addicts will be willing to dish out the additional dollars for their favourite pizzas, burritos and poutine dishes.