Canadian restaurants feeling the pinch as diners cut back on eating out
· Toronto Sun
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OTTAWA — More than 40% of Canadian restaurants are operating at a loss or barely breaking even, says new data released this week.
And compounding that pressure, according to Restaurants Canada’s annual Foodservice Facts report, affordability issues are forcing Canadians to eat out far less than they used to.
“They are having to pull back,” said Restaurants Canada President and CEO Kelly Higginson.
“This is not a choice that Canadians are making willingly. They are feeling forced again, another year of challenging affordability and inflationary pressures.”
Eight in 10 Canadians, according to the report, are dining out less often than they used to, up from 75% a year ago.
The biggest dip, Higginson said, is among households earning $100,000 or more — with 78% of those households eating out less, compare to 70% last year.
For households earning under $50,000, 87% are pulling back.
Bigger impact on the broader economy
This, she said, poses a painful dilemma for restaurant operators.
Because more than 80% of restaurants are small businesses tied to commercial leases with personal guarantees, Higginson said Canada’s restaurant industry is facing a slow trickle of closures as lease renewals come due, rather than a sudden mass collapse.
These closures, she said, have impacts that extend far beyond Canada’s foodservice industry.
“We are the fourth-largest private sector employer, over 40% of our workforce are youth,” she said.
“If we have less people coming through the doors, we have less shifts, we have less hours.”
Canadian eateries, according to Restaurants Canada, employ 1.2 million workers, including nearly 500,000 youth, and continue to be Canada’s top source for first-time jobs.
Canadian restaurants purchase $43 billion in food and beverage products annually, with most coming from Canadian suppliers.
Every dollar spent at a Canadian restaurant generates $2.25 across the broader economy, she said, sustaining 300,000 spin-off jobs in related industries.
“That’s a huge number,” Higginson said.
“You’re going to see pullback on Canadian agriculture — 80% of the chicken we buy is Canadian, 80% of the dairy we buy is Canadian — so we’re going to have an immediate impact.”