Restaurants Canada Q2 Report: Costs Soar, While Traffic Trails Off
June 25 2024 - 1:01PM
The foodservice industry has faced numerous challenges in recent
years, but what stands out in the Q2 Report of 2024 is the one-two
punch of weaker consumer spending coinciding with operating costs
at an unprecedented high.
The first half of 2024 has been difficult as the combined impact
of fewer visits and high operating costs are hitting all at once.
Running a restaurant has never been more costly. Traditionally,
this industry operates on slim profit margins, and the record-high
cost of food and less discretionary spending in the pockets of
consumers, is causing extraordinary strain.
Key findings from the report indicate food and labour costs
remain the top challenges facing most restaurant owners. When
asked, the average restaurant company reported their total food
costs have increased by 25% over the last two years, while labour
costs increased by 18%. Many operators find themselves at a
crossroads, contemplating raising menu prices to offset the high
food costs, but fear that will only further discourage people from
visiting.
Operators do everything they can to keep costs from being passed
down, but that has also resulted in higher bankruptcies. In April
2024, 74 restaurants declared bankruptcy compared to 53 in April
2023. The true number of closures would be even higher as many
restaurants opt to close their doors without formally declaring
bankruptcy.
A Call for Relief
To mitigate these challenges facing the industry, protect the
jobs, our tourism product and community gathering places,
Restaurants Canada is advocating for several measures that would
ease the burden on operators.“Immediate federal government
interventions are crucial to ensure the sustainability of this
vital sector. Initiatives such as lowering the EI Premium can
provide critical relief,” said Kelly Higginson, President and CEO
Restaurants Canada. "In addition, facilitating a program to match
and train open-work permit holders with employment opportunities in
restaurants is another strategic move to sustain the foodservice
sector," added Higginson, noting the urgent need for solutions.
Operator Sentiment
The outlook for the future fluctuates by segment of the
foodservice industry. Overall, 43% of quick-service restaurant
companies say they are positive and hopeful about the future,
compared to 29% of table-service restaurants. However, even when
respondents are hopeful, it is usually met with some trepidation,
as one restauranteur stated: “If we can get a handle on rising food
costs and labour shortages, we will survive.”
Media wishing to read the full report, may reach out for
access.
About Restaurants Canada Since 1944 Restaurants Canada is a
national, not-for-profit member-based trade association advancing
the potential of Canada’s diverse and dynamic foodservice industry
through member programs, research, advocacy, resources and events.
Canada’s foodservice sector is a $114 billion industry that serves
22 million customers across the country every day. As the
fourth-largest private-sector employer, Canadian foodservice
directly employs nearly 1.2 million people, and indirectly
supporting another 270,700+ jobs in related industries, with $38
billion in food and beverage products purchased every year.
Annette Goerner
Restaurants Canada
613-818-6941
media@restaurantscanada.org