Half of restaurants in Canada operate at a loss or ‘just break even’

Restaurants are facing a bumpy road to recovery from years of pandemic-related challenges. Follow Canadian restaurant.

“Restaurant operators are struggling financially, with half of our operators operating at a loss or breaking even,” said Christian Buhagiar, CEO of the national organization. .

“For companies that are making money, it’s about 2-3%, so that profit is very slim,” said Mark von Schellwitz, Restaurant Canada’s vice president for Western Canada.

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“They are doing everything they can to get through this.

“It’s a flexible and innovative industry and we’ve had to do everything over the last few years just to keep our doors open. But as a result we have what I call a post-pandemic hangover and there are a number of obstacles that are preventing us from fully recovering, the labor shortage being one of them, the cost of inflation above everything. – all of our inputs are increasing dramatically.

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“Plus, with 85% of our members saddled with debt during the pandemic, you’ve got a rising interest rate environment.

“And, as a result of the labor shortage, we had a lot of our restaurants operating at only about 80 percent capacity because they simply didn’t have the full staff to operate,” says Von Schellwitz. whole.

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Canadian restaurants expect nominal sales to return to pre-pandemic levels before the end of the year. Traffic is still below 2019 levels.

“We are really happy that so many of our guests will be returning,” said Von Schellwitz.

“We certainly want to encourage those customers to get out the way they have, but of course we’re still not at that pre-pandemic level, especially in the city centres, where we still don’t have many. people working in their offices. . “

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In the 2022 edition of Food service eventsThe nonprofit association says there are some positive signs:

  • 90% of Canadian consumers say they still get their dollar’s worth from restaurants
  • 89% feel comfortable eating indoors at a full-service restaurant
  • 74% have a positive view of food service workers, the highest of any private industry

“Canadian restaurant owners have been resilient and creative, and even though their food, utility and rent costs are going up, they are doing what they can to move as little as possible,” said von Schellwitz. that cost to the customer the better.

He said menu inflation is projected to be around 7.8% this year.

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“Monetization has been really tough…with a 22% increase in utility costs. People forget we are big users of natural gas. We have to cook your food, we have to clean your dishes. Plus, when you’re talking about the price of beef up 16.8%, chicken up 10%, dairy up almost 20%, it’s really hard.”

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When it comes to the role of governments, von Schellwitz asked lawmakers to try to “do no more harm”.

“No regulations, no extra costs. We’re really having a tough time dealing with inflationary pressures, dealing with labor costs, growth and shortages, and of course, debt repayments. “

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More debt

Based on a survey of independent full-service restaurants, Restaurants Canada found:

  • 85% of independent full-service restaurants incur new debt due to COVID-19
  • 23% have debt of less than $50,000
  • 44% have a debt of between $50,000 and $100,000
  • 35% have debt greater than $100,000

High cost of food

According to Restaurants Canada, rising food costs are one of the top challenges facing food service operators across the country. Rising food costs mean menu prices have risen to all-time highs.

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The association showed average quick-service restaurant menu prices up 6.7% and full-service restaurant menus up 6.5%.

The price of alcohol at licensed establishments increased by 3.8%.

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Canadian restaurants grapple with staff shortages, rising costs

Lack of staff

Although food service remains one of Canada’s top employers, the industry has major challenges filling vacancies. Canadian restaurateurs say that means the industry is lagging behind others when it comes to job recovery.

In June 2022, there were 171,715 job vacancies in the food service industry, a threefold increase from pre-pandemic levels.

Canadian restaurants see operators transforming business models to navigate labor shortages:

  • 72% increase in working hours of management and ownership employees
  • 64% reduction in operating hours
  • 77% increase in salary

According to von Schellwitz, takeaway food service boomed during the pandemic. However, many restaurant owners would love to welcome their returning customers in person.

“A lot of our members want their guests back to the restaurant. That’s where the real experience happens. You want that atmosphere, you want people to get together, have a good time.

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“We encourage our customers to have a little patience if service isn’t right if you are in short supply and to continue supporting the industry as we go through this difficult time.”

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