Canadian restaurants poised for rebound

Of all industries, the restaurant business was particularly hard hit by the pandemic -- but a new report says that a rebound might be likely by 2022.

The annual Food Service Facts report was just released by Restaurants Canada, a national industry association, and it showed some grim numbers: 10,000 establishments have permanently closed and April 2020 was the lowest level of sales in more than 20 years.

“Everything was broken and it was an industry that was pushed to the brink financially, just in terms of all the challenges that had happened,” says Chris Elliott, senior economist at Restaurants Canada in Toronto.

“What restaurants have been doing for the last 18 months is trying to create some order out of this pile of chaos and we’re not there yet but what we have seen is an incredible amount of innovation and changes in the industry.”

As an example, about half of all 2020 restaurant traffic was done through drive-thru restaurants, says Elliott.

“It was just phenomenal, that shift, and how people were spending their money. They were still going out to restaurants but the way that they were interacting with restaurants had really changed.”

Restaurant chain Charcoal group made a point to stay connected with laid-off workers through regular check-ins and video cooking events.

Hope on the horizon?

While the turnaround might be slow to manifest itself, for one industry expert, there are signs it’s well in gear.

“Everybody is getting busier. I’ve worked with a bunch of concepts that are really, really busy and they have done double-digit growth versus last year,” says Tom Missios, EP Restaurant Group concept specialist in Markham, Ont.

But then there are other guys who just can’t seem to make it.

“That’s the difference between some of the big boys and somebody who’s struggling,” he says.

For some establishments, the pivot has brought great results. “There’s a lot of people out there who have capitalized on online ordering big time. That’s the people who are doing double-digit growth. They figured out that’s the way to go and it’s not going to change anytime soon,” says Missios.

In the quick-service segment, according to Elliott, things have returned to normal.

“Overall, annual sales will be back to pre-pandemic levels next year.”

But for the full-service businesses, sales won’t return to those same levels until next year, he says.

“In the summer months, sales were better than expected or at least better than what we were expecting to see. That pent-up demand drove [customers] to patios,” says Elliott.

The industry as a whole will probably not return to full capacity for a few years, says Elliott, as number of negative pressures remain in place.

“It’s still probably going to be about 2023, if not in 2024, that we start to see that full recovery and traffic largely because a lot of the employees are still working from home like I am today. The downtown cores have not seen that return of the employees, like a lot of people were expecting and with tourism, it’s still going to take a number of years for that to really get back to where it was.”

One of Ontario’s full-service restaurant groups provided assistance to frontline workers during lockdowns.

"The anxiety created by the roller coaster actions of government-mandated openings and closings is having a significant financial and mental health impact on many of our frontline teammates," says Frank Hennessey, CEO of Recipe Unlimited.

Troubles with vaccines, labour shortages

With the introduction of vaccine passports in many provinces, there are also new challenges, says Elliott.

“Twenty per cent of the population can’t attend or come to your restaurant. Restaurants are certainly ready for it, they want to open up but there are some provinces where they introduced the passport.”

Old challenges remain constant in the business, says Missios, which may dampen future enthusiasm. Labour shortages are even more acute and “the price of goods has gone up, maybe, 10 or 15 per cent, depending on what the products are. The big distributors like Cisco, GFS, all the major players, everything is up.”

But for Elliott, the numbers show a rosy future for the industry.

“Nine out of 10 Canadians said that they’re looking forward to going out to restaurants with friends and family again once the pandemic is over… and 64 per cent said that restaurants are going to be a really big, important part of their lifestyle once all this is over... and then there’s the economic factors like disposable income, that accumulated savings, that consumer confidence is all there as well so that all bodes well.”

The federal government announced new programs to help out furloughed workers and a survey found that salary still matters to a lot of employees.