Restaurants eye fall price hikes as cost of cooking oil, ingredients rises

Beavertails - cooking oil

Local restaurants are eyeing fall price adjustments to keep pace with inflation, which is raising the costs of basic ingredients, including cooking oils. 

Andy Cullen, a managing partner with BeaverTails Ottawa, said the pandemic has led to significant price hikes that have eaten into profits. 

Cullen said cooking oils are among the primary culprits, with prices doubling between January 2022 and the beginning of this year. 

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According to Cullen, BeaverTails mostly relies on canola oil to make its renowned fried pastries. Like other vegetable oils, including palm, sunflower and soybean, the world production of canola oil has taken a significant hit in the last few years. 

“COVID caused prices to go up for just about everything,” he said. “At times you couldn’t even get products because manufacturing was down. Once their inventories were depleted, they didn’t have any more.”

According to Statistics Canada, 2022 hit cooking oil hard, with the average cost of a three-litre container jumping from $8.45 to $12.01 between August 2021 and August 2022. 

At the time, the International Food Policy Research Institute said price increases on food could primarily be attributed to poor weather conditions, including droughts in South America and a typhoon in Malaysia, as well as higher costs of fertilizer and pandemic-related labour shortages. 

Geopolitical instability stemming from Russia’s invasion of Ukraine was also a major contributor, especially because Ukraine is a top exporter of sunflower oil. 

The canola oil the BeaverTails uses has noticeably increased in price, according to Cullen. In July, a 16-litre barrel cost $51.27. While a decrease from the recent high of $61.21 in January, the price is still nearly twice as much as it was in January 2022, when the same container cost $27.93. 

“It’s starting to drop, but it’s not back to where it was,” said Cullen. 

Anish Mehra, owner and general manager of the East Indian Company Restaurant locations on Nepean and on Somerset Street, said he’s noticed a similar trend. 

“It was a little higher at the start of the year and it’s come down a bit,” he said. “We’re shopping around, trying to find deals. You can sometimes find (cooking oils) for cheaper, but the quality isn’t always as good.”

Still, Mehra said prices remain “significantly higher” than they were before the pandemic.

But cooking oil isn’t the only item whose prices have gone through the roof in the past couple of years. Mehra said his restaurant has had to eat the extra cost of rising prices on dozens of basic ingredients, from dairy to flour, and most recently, sugar. 

“A lot of the basic ingredients have really skyrocketed,” he said. “I’m sure everyone noticed on their home bill as well, but we’re often buying in the thousands. What used to cost us $1,000 or $1,500 in groceries is now costing four grand.”

Keeping up with inflated costs has proved challenging for local restaurants, especially during the busy summer season. Both Mehra and Cullen said no significant changes have been made to prices, recipes or portion sizes, leaving the businesses to absorb the extra costs. 

“Unfortunately, you can’t always raise your prices just because the costs have gone up,” said Cullen. “The market will always have their price ranges.”

While BeaverTails has slightly raised product prices on select flavours in the spring, Cullen said in Ottawa, they’re waiting until crowds slow down after Labour Day to consider any other increases.

“We are eating a lot of the costs, and we’ll work towards addressing it more once we’re out of the busy season,” he said. “We’re fortunate that oil consumption isn’t our biggest expense for making a BeaverTail. But it’s butter, and the cost of butter has also gone way up. We probably feel way more effects there than the cost of oil.”

Mehra said his restaurants raised prices on menu items by just a dollar or two last year, but they also won’t be looking to make another change until at least the fall. 

“The danger is you can’t do too much or you end up scaring people away,” he said. “We’re planning in the fall or maybe in the new year to add another dollar across the board, but really, what that’s going to do is just let us keep up with the inflation.”

He added that profit margins are down to two to three per cent now, compared with five to six per cent pre-pandemic.

While he doesn’t expect prices to take a significant drop any time soon, Mehra said his hope is that prices on cooking oil and other basic ingredients will at least start to level off. 

“If the price is stabilized, even if they stay where they are now, hopefully a lot of restaurant owners can start to add up a little bit here and there to start to get more profitable,” he said. “The problem is when oil jumps from $16 to $40, I can’t then sell my butter chicken from $20 to $30. But I can add a dollar this year and a dollar next year, if things can stabilize.”

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