Canada’s restaurant industry is bracing for the biggest jump in the country’s alcohol excise duty in more than 40 years, spurring warnings the tax hike could force some bars and restaurants out of business.
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Couple craving Cape Breton pizza burgers has them delivered to their Ontario wedding – CBC.ca
Cheesy, saucy and savoury — nothing tastes quite like a Cape Breton pizza burger.
You might get a few blank stares when asking for one on the mainland, but they are a cultural icon for people on the island.
They’re so well loved, that one couple recently gave them away as a late-night snack at their wedding.
Allen Rankin grew up in Southwest Mabou, but now lives and works in Sault Ste. Marie, Ont.
He and fiancée Rachel Johnson had been planning to get married in Cape Breton but when things changed, Rankin decided to bring a little bit of the island to Ontario.
“I said, ‘Wouldn’t it be cool if we get pizza burgers?'” said Rankin, whose nuptials were set to take place Saturday in Prince Township.
“Rachel tried them when we were home and she said, ‘Yes, we could do that.'”
A unique treat
Johnson, who grew up in Ontario, had never heard of a pizza burger before a trip to Nova Scotia three years ago.
“Allen was like, ‘You have to try these,'” she said. “I think we went to his parents and said ‘Hello’ and then we went directly to the Freshmart for a pizza burger.”
The pre-packaged snack is typically made of pepperoni, mozzarella cheese, a tomato-based pizza sauce and a sesame seed bun. In Cape Breton, pizza burgers are most often refrigerated and sold at local gas stations and convenience stores.
The couple reached out to Paul’s Food Factory in Whitney Pier, N.S., which makes the pizza burgers, to see if 100 of the bagged treats could be made for their special day.
The company’s owner, Jennifer Price-Sheppard, not only took the order, but personalized the packaging to include the couple’s names and their wedding date. Rankin’s parents planned to drive the pizza burgers to Ontario.
Price-Sheppard said it was not the first time an engaged couple had asked for the favour.
“People just grew up with them,” she said.
Humble beginnings
Company founder Paul Price started making submarine sandwiches for his own convenience store in 1982.
It came out of necessity, as another supplier had stopped showing up at regular intervals. Workers from the steel mill in Whitney Pier at the time were hungry.
He began by making the sandwiches at night and bringing them to local stores in the family’s station wagon. The pizza burger would soon follow, and within three years, Price was selling his products across the island.
“The customers lined up for them sometimes,” said Price, who eventually closed his convenience store to focus on the ready-made meals.
At one time, Paul’s Food Factory was supplying its pizza burgers to 300 stores on the island, but with so many stores closing, they’re now down to about half that number.
Price-Sheppard said both she and her father never changed the recipe, but last year they were forced to temporarily switch up some ingredients when COVID-19 interfered with their regular pepperoni supply.
“Sales dropped drastically,” said Price. “We were nervous. It was an uproar.”
Official food?
Price-Sheppard said she sent a letter to the Cape Breton Regional Municipality asking the mayor and council to consider making pizza burgers the official food of the region.
A similar declaration was given to the donair in Halifax about six years ago.
CBRM Mayor Amanda McDougall said she’s beginning the process of proclaiming Paul’s Food Factory pizza burgers as the official food of the municipality as the business celebrates its 40th year.
“You can go anywhere across Canada, and if you’re from Cape Breton, you know what a pizza burger is,” Price-Sheppard said.
Wedding wonder
Rankin said it’s hard to pinpoint exactly what he loves so much about the snack.
“I used to eat those things like five days a week,” he said. “There’s probably a bit of nostalgia to it.”
The couple were planning to borrow three or four microwaves to allow guests to eat the pizza burgers the proper way.
“You’ve got to poke a hole in the bag and then you put it in the microwave for 30 seconds or something like that,” said Rankin.
“The cheese is just melting just right. Give it a second to cool off so you don’t burn the roof of your mouth, which I’ve done a thousand times.”
The couple said they weren’t quite sure how their family and friends from outside Cape Breton might react to their late-night feast.
“It was kind of trying to give the wedding a little bit of a Cape Breton flavour,” said Rankin.
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Chapter Two Brewing Company in Windsor is celebrating a milestone this weekend.
“Five years! We’re pretty pumped that we got this far and we’re still going strong,” said brewery co-owner and general manager, Cheryl Watson. “It’s good news, I mean, we’ve gone through a lot.”
From the impact of lockdowns during the pandemic to recent inflationary pressures and wage increases, Watson notes the cost of doing business has been steep.
And that anniversary celebration will clouded by a looming alcohol excise tax increase on all alcohol producers.
“I think everything is just, it’s been unpredictable for suppliers and buyers alike,” Watson said. “We have to look at and figure out what part of it you’re going to cover and what part of it you’re going to ask your customer to cover.”
That question will get harder on April 1 when the 6.3 per cent federal excise tax goes into effect on beer, wine and spirits producers.
Taxes already make up 50 per cent of the cost of beer, 65 per cent of the cost of wine and 75 per cent spirits, according to the Canadian Taxpayers Federation.
“The screws are tightening and we don’t have as many places to play anymore,” said Watson.
The increase on the table is triple the usual jump — a number tied directly to inflation — and has alcohol manufacturers wondering who is going to pick up the tab.
“You’re going to see probably a six to 10 per cent increase on the price of your beer,” said Shane Meloche, the owner of Frank Brewing Company in Windsor. He’s weathered the storm that is the past few years in the hospitality industry and doesn’t want to raise prices but worries this time, he may have no choice.
“We’re here to make money. We’ve got 20 to 30 people that work here. We need to stay in business,” Meloche said. “We want to keep everybody employed. So the only way to do that is to pass along that price to the consumer.”
Restaurants who sell alcohol will also feel the effects. A recent Restaurants Canada survey found about half of Canadian restaurants are operating just at or below profitability levels, noting the tax increase will cost Canada’s food-service industry about $750 million a year.
“Their profit margins are very slim. And then when you have a six per cent increase, it’s slimmer,” said Paul Boots, who along with business partner John Conlon launched Suds Runner just a few months back.
It’s a licensed manufacturing representative retailer for nine different Breweries in Ontario where customers can go online and order flights of beer from them that you can’t get at the LCBO or Beer Store — and they bring it to your door.
They started the venture to support local breweries and give their less popular brews more exposure for customers who can’t make it out to craft breweries as often as they’d like.
They hope the increase doesn’t crush their suppliers, customers, or them.
“It’s important, I think, for people to understand that if the price is going up a little bit, it’s not because they’re making more money,” said Conlon.
“They’re just trying to work, trying to make it work.”
Tumbling stocks dragged down other major banks across Europe, fuelling fears about a banking sector crisis.
Shares in Deutsche Bank have fallen sharply, dragging down other major European banks and reigniting fears about a widening banking sector crisis.
Germany’s biggest lender dropped more than 14 percent on the Frankfurt Stock Exchange in Friday morning trading before clawing back ground in the afternoon to trade 9.5 percent lower, at 8.43 euros ($9.07) a share.
Tumbling bank stocks dragged down markets across Europe on Friday with Germany’s Commerzbank down 7.5 percent, France’s Societe Generale off 5.9 percent and Austria’s Raiffaisen down 5.9 percent.
Deutsche Bank is one of 30 banks considered globally significant financial institutions, so international rules require it to hold higher levels of capital reserves because its failure could cause widespread losses.
The long-troubled bank has become the focus of investor concerns after the collapse of three regional US lenders and the Swiss government-brokered takeover of Credit Suisse by rival UBS triggered market turmoil this month.
The cost of insuring the bank’s debt against a risk of defaulting, known as credit default swaps, has surged as investors fret about the banking sector’s health.
Rising costs on insuring debt were a prelude to Credit Suisse‘s rescue by UBS. That hastily arranged takeover on Sunday and jitters about Credit Suisse’s long-running troubles led its shares to tank and customers to pull out their money.
Asked whether Deutsche Bank could be the next Credit Suisse, German Chancellor Olaf Scholz said, “There is no reason to be concerned.”
Scholz expressed confidence in Deutsche Bank, saying it had “modernised and organised the way it works. It’s a very profitable bank.”
Speaking in Brussels after a summit of EU leaders, he also said the European banking system was “stable” with strict rules and regulations.
Deutsche Bank said on Friday that it would redeem $1.5bn in tier 2 bonds early. Such a move is normally aimed at boosting confidence in a bank although its shares plunged regardless.
The bank was hit by a string of problems linked to its attempts before the 2008 global financial crisis to compete with Wall Street investment banking giants.
But it launched a major restructuring, which involved thousands of job cuts and a greater focus on Europe, and has returned to financial health. Last year, it booked its highest annual profit since 2007.
European officials said banks in the European Union’s regulatory system, which does not include Credit Suisse, are resilient and have no direct exposure to the failed California-based Silicon Valley Bank and little to Credit Suisse.
Efforts to strengthen banking regulation in recent years “puts us all in a position to say that European banking supervision and the financial system are robust and stable and that we have resilient capitalisation of European banks”, Scholz said.
European leaders, who played down any risk of a possible banking crisis at their summit on Friday, said the financial system is in good shape because they require broad adherence to tougher requirements to keep ready cash on hand to cover deposits.
International negotiators agreed to those rules after the 2008 financial crisis, triggered by the failure of US investment bank Lehman Brothers. US regulators exempted midsized banks, including Silicon Valley Bank, from those safeguards.
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Bar and eatery operators across Canada have endured lockdowns, labour shortages, supply chain mayhem and soaring costs for everything from payroll to cooking oil. Rising inflation has also softened demand as some consumers stay home to save money.
“Many of us haven’t recovered from the pandemic and now they want to raise this tax,” she said. “It’s hard to get blood out of a turnip. We’ll see more restaurant closures if this goes ahead.”
The federal beverage alcohol duty is set to increase 6.3 per cent on April 1.
While the duty is separate from provincial liquor board fees and sales taxes, it ultimately filters down to higher prices for consumers, said CJ Helie, the president of Beer Canada.
“It’s imposed at the point of production and paid by the manufacturer, which means it’s built into the price of the product and magnified as it goes through the supply chain from the distributor to the retailer,” he said.
The automatic annual tax increase is a long-standing irritant for the beverage industry, but was “digestible” when inflation was around two per cent, Helie said.
But this year’s adjustment is more than triple the usual increase and should be reconsidered given the state of the industry, he said.
Some brewers may try to absorb the higher cost by delaying investment plans like new hiring but he said there’s only so much they can do before passing the tax hike along.
“They’ll try to recoup what they can through the wholesale price but it could impact demand and end up costing them in lower sales volumes anyway,” Helie said.
Alcohol excise duty rates are adjusted by law on an annual basis to account for inflation, Adrienne Vaupshas, press secretary of Finance Minister Chrystia Freeland, said in an email.
The increase next month works out to less than a penny on a can of beer, she added.
But industry group Restaurants Canada said it will cost Canada’s food-service industry about $750 million a year, with the average casual dining restaurant expected to pay an extra $30,000 towards alcohol.
At the retail level, the impact may be more subtle. Though added on top of other price increases, consumers may notice higher prices.
The Liquor Control Board of Ontario said customers may experience a price increase on select products by the end of April if manufacturers pass along the federal excise tax increase.
A spokeswoman for the Nova Scotia Liquor Corp. said beverage alcohol prices are increasing by just over three per cent overall next month.
But these increases are due to a number of factors, including higher excise taxes and the rising cost of raw goods such as bottles, cans, barley, and labels, NSLC spokeswoman Allison Himmelman said in an email.
In British Columbia, a spokesperson for the BC Liquor Distribution Branch said it’s not possible to confirm what level of price increase consumers may or may not see.
“Each liquor supplier will decide whether or not to increase its wholesale price to account for the increase it must pay in excise duty,” Robin Fraser said in an email.
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“Then retailers will make the decision on whether to adjust the prices for consumers for those products,” Fraser said. “It is up to each retailer to determine if, and by how much, to raise its prices.”
Alcohol beverage prices rose 5.7 per cent in February compared with a year before, according to Statistics Canada.
While that’s only slightly higher than the overall inflation rate of 5.2 per cent last month, the tax hike in April along with other increases could see the alcohol inflation rate rise faster than general inflation later this spring.
“Our industry is struggling and we can’t absorb more increases,” said Olivier Bourbeau, vice-president of federal affairs with Restaurants Canada. “Restaurant margins are always thin but right now they’re around two to three per cent.”
This is in part because restaurants are absorbing some of the higher costs due to inflation, Bourbeau said.
Indeed, while grocery prices recorded a 10.6 per cent year-over-year increase in February, restaurant food prices only rose 7.7 per cent, Statistics Canada figures show.
Also, alcohol beverages purchased from stores rose 6.0 per cent in February, while alcoholic beverages served in licensed establishments increased only 4.3 per cent, the agency said.
“Restaurants can’t absorb any more price increases,” Bourbeau said. “But if they pass those costs to customers it could hurt their business.”
“At the end of the day, consumers will only pay so much before they start to cut back.”
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