Restaurant costs have climbed faster than grocery prices over the past several months, indicating business owners are still dealing with a lot of problems, according to Restaurants Canada.

Kelly Higginson, the president and CEO of Restaurants Canada, said in the beginning, restaurant owners were hesitant to pass increased costs on to customers. However, as the pressure kept increasing, many of them had no choice but to make their prices go up.

While grocery inflation slowed down to 1.9% in March compared to a year ago, food prices at restaurants went up by 5.1% in that same time period. Fast food and take-out restaurants had the biggest price increases, with a 6.4% jump in March compared to a year earlier.

Restaurant owners are dealing with a lot of cost pressures, including rising insurance and labor costs, as well as rising interest rates. Coming out of the epidemic, many people were deeply in debt, which makes it hard to manage expenses.

Despite needing to raise menu prices, restaurant owners have been cautious, especially during the post-pandemic recovery period when the focus was on getting the industry back on its feet and getting customers back into dining establishments.

Inflation trends have changed, with food prices at restaurants being consistently higher than grocery inflation since the second half of 2023. This trend has continued, with restaurant inflation remaining above 5% while grocery inflation has slowed down.

The restaurant business has been hurt badly, with almost two-thirds of businesses either losing money or just breaking even. Last year, there were more bankruptcies in the industry than there had been in a decade, which shows how much financial stress businesses are under.

The industry’s difficulties have been made worse by weak sales caused by customers being wary of spending when prices are rising. Even though patio season is coming up and could help boost sales, many businesses are still having trouble improving their margins in the face of ongoing inflationary pressures.

In March, restaurant prices were one of the main reasons for overall inflation, along with mortgage interest, rent, gasoline, and car insurance premiums.

Grocery inflation has been going down in recent months, but that may not help people right away. Over the last few years, rising food prices have put a big strain on households, leading them to look for value-oriented options like discount stores and private-label products.

Major grocery chains have added more discount options in response to what customers want, but household costs are still being affected a lot. Shoppers are likely to keep looking for deals and ways to cut costs when food prices stay high.