Half of Canadian restaurants only breaking even or losing money: report
Posted October 26, 2023 10:22 am.
Despite COVID-19 restrictions being lifted more than 18 months ago, the Canadian restaurant industry is still struggling to recoup losses and things appear to be as grim as ever.
A new report from Restaurants Canada finds half of all eateries are currently operating at a loss or are just breaking even. It blames things like the high cost of food, insurance, rent and labour, pandemic-related debt, and ongoing labour shortages.
Matthew Senecal Junkeer owns two restaurants in Vancouver, one in Gastown, and the other in Chinatown. He says his sales are up, but his bottom line is down.
“To give you a sense, our margins pre-pandemic were about eight to nine per cent and our margins are about one to two per cent, which is better than half of our colleagues in this sector,” he told CityNews.
He explains this is also why the price of a meal has increased.
“As any consumer would see if they went to a grocery store, the cost of just about every good has gone up. In our business, if an item increases in cost $1, to keep our margins, we need to pass on $3 to the customer. A lot of restaurants, in the end, have been taking it on the margin.
“Pre-pandemic in 2019, a case of avocados cost $42. I just bought avocados at $92. If you think of an $8 avocado toast, 50 per cent of that cost is on avocados and if the avocados more than double, it’s a really hard jump for consumers who are used to paying $8 who are suddenly paying $16, which even to me seems like highway robbery.”
He adds increasing the minimum wage while not bringing in enough profit has also hurt them.
Junkeer says the survival mode of the pandemic hasn’t worn off.
“There’s not a lot of leeway. We’re seeing bankruptcies rise in our sector and I’d expect more of them to come. On my block here in Gastown, in 2019, there were eight restaurants that operated and today there are three restaurants that are operating.
“With CEBA loans due soon, I think that will be the straw that breaks the camel’s back for a lot of restaurants. We’re apprehensive and fearful of what’s to come, particularly the independents.”
Restaurants Canada says it wants all levels of government to intervene to ease the burden on the industry.
“They need to focus marketing efforts on their particular guest demographic to strategically increase guest counts, continue to embrace technology to reduce costs, and increase labour productivity,” said Mark von Schellwitz, vice president of Restaurants Canada for Western Canada.
He adds more people dining in, rather than eating at home, will also help.
“To survive and overcome the current challenges restaurants need to rebalance for growth by rebalancing menus both for on-premise and off-premise dining. In some cases this means reducing the number of menu items and/or focusing on menu items that provide the greatest value to guests and menu items that are more well-suited for takeout and delivery,” von Schellwitz said.
“They also need to rebalance the seating in their restaurants looking for ways to utilize unused on-premise seating lost due to the shift from on-premise to off-premise dining or reduce seating focusing more restaurant space on takeout and delivery sales.”
–With files from Greg Bowman
