At The Birds & The Beets in Vancouver, Matthew Senecal-Junkeer runs a cafe-restaurant that offers sandwiches and coffee during the day and switches to wine and small plates at night. Senecal-Junkeer has observed a shift in customer price sensitivity from day to night. Customers are more price-conscious during cafe hours, making choices based on cost, such as opting for oat milk over regular dairy or adding avocado to a sandwich.
Senecal-Junkeer noted a trend where customers lean towards cheaper menu items during the day, resulting in increased sales of lower-priced items and a decrease in sales of pricier menu options. However, in the evening at the wine bar, customers seem less hesitant to indulge in high-ticket menu items, viewing it as a luxury experience without closely monitoring expenses.
According to a report by Restaurants Canada, the economic impact of rising costs is affecting restaurants and consumers differently. Quick-service restaurants are facing more significant challenges compared to upscale establishments, reflecting a “K-shaped economy.” This economic divide means that those with higher incomes can still afford fine dining experiences, while lower-income individuals are forced to cut back on discretionary spending due to economic instability.
The report also reveals that full-service restaurants experienced a 4.6% sales growth in January, whereas quick-service restaurants saw a decline of two percent. Fine dining establishments witnessed the most significant increase in traffic in 2025, indicating a more robust performance at the upscale dining level in Canada.
Despite the growth in fine dining, many restaurants are struggling, with almost half reporting lower total sales and a decrease in customer traffic. Quick-service restaurants are particularly affected, with 81% reporting declining profitability. Rising fuel costs are expected to further impact restaurant expenses and consumer behavior, with quick-service establishments serving as an indicator of broader challenges in the industry.
Food economist Mike von Massow attributes the challenges faced by quick-service restaurants to increased competition and changing consumer behaviors. Lower-income Canadians, who frequent fast-food establishments more often, may cut back on dining out due to financial pressures. This shift in consumer behavior could have repercussions on job opportunities, especially for young individuals seeking employment in the fast-food sector.
While quick-service restaurants face competition from grocery stores and changing consumer preferences, fine dining establishments like Pearl Morissette are thriving. Chef Daniel Hadida highlights a trend where high-end dining experiences are becoming the main attraction for customers seeking a special and impressive culinary experience. Despite the success, Hadida maintains fair menu prices to accommodate all diners, reflecting a commitment to providing a memorable dining experience for patrons.
Senecal-Junkeer faces a dilemma in navigating price sensitivity among his customers while dealing with increased food costs. Balancing the need for volume with maintaining margins, he has opted for a modest menu price increase to address rising expenses while keeping the customer experience affordable.
In conclusion, the restaurant industry’s landscape is evolving, with varying impacts on different types of establishments based on customer preferences, economic conditions, and competition within the sector.