Canada’s restaurant industry roars after two years of pandemic pain – but soaring inflation dulls joy

Sasilka Shallangwa, creative director of SK Cookks, at the restaurant in Toronto on July 13.Tijana Martin/The Globe and Mail

As the creative director of SK Cookks, a Nigerian restaurant in northwest Toronto, Sasilka Shallangwa was about to make her big move downtown when the pandemic hit in early 2020.

The next two years were misery. Not only were her dreams of moving thwarted, but she struggled to find a sense of normalcy. “We thought the pandemic would be over in a year,” she said. “We had to close at some point and change our opening hours just to figure out how to stay afloat.”

Now she finally sees things changing. The provincial government has lifted most of its remaining pandemic restrictions and Ms Shallangwa has resumed operations. Customers are also back. “People are excited to go out and eat and hang out,” she said.

Statistics Canada recently released data showing that April sales at restaurants and bars rebounded above pre-pandemic levels for the first time in two years.

“Consumers are clearly eager to get out and have fun after two years of pandemic restrictions,” Toronto-Dominion Bank economists wrote in a recent report.

Food inflation makes restaurants less appetizing

Restaurants are back as restaurants rebound to pre-pandemic levels

It’s a blessing for restaurants, but owners and managers don’t exactly breathe a sigh of relief. The experience on the ground is much more nuanced. Diners are back, but restaurants are now struggling with soaring prices. Inflation is so rampant that the Bank of Canada raised its key rate by a full percentage point this month – the first time it has done so in nearly 25 years.

“Everything is ridiculously expensive and restaurant owners are losing their minds,” Ms Shallangwa said. “So it’s not about getting out of COVID anymore. When you go to grocery stores, the prices of things are just very expensive. We really hope to see it go down simply because profit margins are no longer there at the rate that prices are changing.

Inflation hit 8.1% in June, the biggest rise since 1983. Food prices rose 9.4% last month from a year earlier.

Labor is also a major issue. During the pandemic, many restaurant workers have moved on to other jobs, and the industry is currently reporting a staff shortage. Ontario alone has about 20,000 vacancies in the restaurant industry, according to industry lobby group Restaurants Canada.

It’s especially frustrating for restaurants, said James Rilett, Vice President of Restaurants Canada, because many are still not turning a profit.

“In our last operating report, 40% of businesses said they were still operating at a loss, and this is mainly due to higher costs and the fact that they have a lot of debt to repay due to the pandemic. “, did he declare. said.

There are reasons to be optimistic. Spending by Toronto-Dominion Bank customers using debit and credit cards increased 15% in May compared to the same month a year ago, even after adjusting for inflation, much of this growth comes from spending on services such as catering. Commercial foodservice sales in Canada are expected to reach $74.6 billion in 2022, according to Restaurants Canada, up 21% from 2021.

“We definitely have an increase in business and hopefully we will see people who are able to recover. Every day things seem to get better,” Mr. Rilett said.

But companies must raise their own prices to cover their rising costs. Statistics Canada found that restaurant food prices rose 6.6% in April compared to the same month last year, and alcoholic beverage prices rose 3.8% over the same period.

Harry Ahn, who runs Seoulicious, a Korean restaurant in downtown Toronto, is torn by it all. “Things are much better now than before,” he said. “It’s the first summer that everywhere is starting to open up to people and we’re seeing our customers coming back for dinner.”

Harry Ahn sits in his Toronto restaurant, Seoulicious.Tijana Martin/The Globe and Mail

But Mr. Ahn has also raised the price of some items on his $1 menu to account for rising food costs. Its prices now range from $6 for an appetizer to $34 for a bowl of bibimbap, a special Korean rice dish.

“I am losing money because of the high food prices in the market,” he said. “Most of my customers are students and they don’t go to the grocery store to find out that food prices have gone up.”

What he fears most, however, is another lockdown or a return to takeout-only orders. “We don’t want this to happen again,” he said.

But that kind of uncertainty is now part of life for many restaurants. Ms Shallangwa said the pandemic has taught everyone two lessons: “That nothing is permanent…and your adaptability is what keeps you in business.”

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