Restaurant industry facing bleak outlook, as costs mount even faster than skyrocketing price | Canada News Media
Connect with us

Business

Restaurant industry facing bleak outlook, as costs mount even faster than skyrocketing price

Published

11 months ago

 on

After withstanding the once in a lifetime pummeling of the COVID-19 pandemic, Canada’s restaurant industry is still in dire straits and many businesses are in danger of going under.

That’s the main takeaway from a recent report from Restaurants Canada, which found that despite surviving the depths of the pandemic, the outlook for the industry as a whole looks bleak.

Total spending at restaurants is on track to top $110 billion this year, a 10 per cent increase from the previous year’s level, but costs are up by even more, which is pushing many to the brink of insolvency.

The group says more than half of its members are losing money this year. While that’s not uncommon in an industry known for its razor thin profit margins, in 2019, only about 12 per cent of the group’s membership were at risk.

“It’s very challenging because everything that goes into operating a restaurant has increased double digits,” said Richard Alexander, the group’s executive vice-president, in an interview with CBC News.

For the first five months of 2023, bankruptcies in the sector rose by about 50 per cent compared to the same period last year, and he says even more are coming. “It’s a really, really critical time.”

Escalating costs

Frédéric Dimanche, director of the Ted Rogers School of Hospitality and Tourism Management at Toronto Metropolitan University says he’s not surprised to hear that more restaurants are struggling.

The restaurant industry was hit perhaps harder than any other by the COVID-19 pandemic, since it’s an in-person experience.

Government programs designed to keep people employed and paying the rent helped, but those have now expired, and demand for dining out has not returned to its pre-pandemic levels.

If anything, it’s declining: data from OpenTable, a restaurant reservation system, shows that across Canada, demand has fallen by about three per cent this month, and it’s even worse in some cities. In Edmonton, demand has fallen every month since April, while in Toronto it’s declined five months in a row.

Featured VideoRepayment deadlines are looming for restaurants that took out government-backed CEBA loans to survive the pandemic — but many say they’re just not in a position to pay. We hear from industry insiders about what might happen if restaurants don’t get a break, and ask Minister for Small Business Rechie Valdez whether her government is heeding those concerns.

Meanwhile, costs keep going up.

“Many restaurants have had to increase wages in order to not only attract people but also to keep them,” Dimanche said. “The cost of doing business is increasing.”

Alida Solomon has run Tutti Matti, a restaurant in downtown Toronto for almost 21 years, and she says the situation for restaurateurs like her is dire right now. (Tess Ha/CBC)

Rent increases hurt, too

Alida Solomon knows that all too well.

But as an entrepreneur about to celebrate her restaurant Tutti Matti’s 21st year in operation in downtown Toronto, she says wage increases to attract and keep her staff are nowhere near her biggest problem.

Most restaurants are seeing rent increases of between 20 to 35 per cent in the downtown core right now, which is a major expense to have to swallow on top of everything else.

“Food inflation is over nine per cent,” she said in an interview. “The cost of food plus rent, plus wage increases — which are totally valid, wage increases are normal in the face of inflation — but it’s just the whole package.”

Costs increasing are one thing, but a bigger problem for her is that the pandemic changed the way people live, including demand for restaurants in downtown locations like hers.

Most restaurants typically live or die on their weekend and weeknight dinner rushes, but being where they are, Tutti Matti managed to supplement that need by catering to a downtown office crowd at lunch.

But she says lunch is non-existent now.

“We used to have people that would come every single day for lunch, but we’ve changed our hours of operation — we’re no longer open five days a week for lunch, we’re actually only open three because we found that Mondays and Tuesdays were just not working for us.”

Consumers are tapping out

Solomon says there’s less demand for dining out in general, and that echoes what diners on the streets of Toronto told CBC News this week.

Aly Dhalla says it’s hard to ignore that the price of a meal keeps going up, even as the quality and quantity declines.

“If you go out now, you’re paying more and it doesn’t taste as good,” he said. “Portion sizes are getting smaller — but you also understand the economic times for business owners who own restaurants, so you just put up with it. But it’s a little unfortunate.”

Inflation is taking a bite out of diners’ appetite for restaurants

 

Featured VideoOn the streets of Toronto, diners told CBC News that high prices, lower quality and smaller portions have them eating out at restaurants less often of late, a trend which is pushing many restaurateurs to the brink of bankruptcy.

Solomon says her restaurant likely isn’t turning a profit right now, but because she loves the business so much any day she can open the doors and keep her staff paid and diners fed is a win.

“But all of us at some point in the last year have had close calls with making that decision to pull the plug.”

She says restaurateurs like her are used to wearing many different hats depending on the day, from dishwasher to bartender, working in the kitchen and serving. But Dimanche says they need a whole different set of skills in order to survive right now

“It’s not because you know how to cook and manage a kitchen that you’re going to be able to do it,” he said. “You have to be also a business manager … an entrepreneur, and those are a set of skills that maybe some current restaurateurs don’t have.”

 

Source link

Related Topics:
Continue Reading

Business

Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

Published

2 days ago

 on

September 13, 2024

By

 

TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

Published

3 days ago

 on

September 12, 2024

By

 

VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Business

Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

Published

3 days ago

 on

September 12, 2024

By

 

MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version