Debt, vacancies, high food prices: profitability continues to lag for Canadian restaurants
Chances are your favourite restaurant is still struggling months after the province ended pandemic-related health restrictions.
Higher food prices, labour shortages, and continued high debt levels remain the toughest hurdles for food service operators. Half are either operating at a loss or just breaking even.
Business should return to pre-pandemic levels by the end of the year. Almost nine of out ten Canadians surveyed by Restaurants Canada were comfortable eating indoors at full-service restaurants, and just as many felt they got good value from those businesses.
Restaurants Canada is a national, not-for-profit association lobbying on behalf of restaurants.
In the meantime, restaurants across the country are still looking for thousands of workers to fill vacancies. In June, the industry needed almost 172,000 people to fill those positions, a three-fold increase since before the pandemic, according to the annual Foodservice Facts report.
Restaurants are shifting gears to navigate the shortage of food service workers. Just over seven out of ten said owners and managers are filling gaps, 77 per cent are raising wages to attract fresh talent, and 64 per cent reduced hours of operation.
“Throughout the past two and a half years, the foodservice industry has developed ‘operational calluses,'” said Restaurants Canada Senior Economist Chris Elliott. “These calluses have made us better able to withstand any future hardship or challenge that may come our way. Lessons learned from the pandemic have made food service operators more resilient and innovative.”
Because of COVID-19, 85 per cent of independent full-service restaurants took on new debt to get by. Eight out of ten of those businesses had debt greater than $50,000, and 35 per cent owed more than $100,000. Low profitability has made it difficult for many restaurants to pay off their debt.
Last December, Restaurants Canada lobbied governments to forgive government-backed business loans and extend repayment deadlines.
Just like average Canadians, restaurants are also paying more for food. In turn, this has forced them to increase menu prices. Full-service ones hiked them by 6.5 per cent, while prices at quick-service spots jumped 6.7 per cent. Alcohol prices were up 3-point-8 per cent.