Tough year for restaurants: Restaurants Canada

Toronto – This year is shaping up to be the toughest year for foodservice operators since 2011, Restaurants Canada says.

While overall foodservice sales were five per cent higher during the first six months of 2018 than during the same period in 2017, real year-over-year sales growth was only 0.7 per cent after adjusting for menu inflation of 4.3 per cent.

“Bars, restaurants and other foodservice businesses are fortunately benefiting from increased sales, but mostly from higher menu prices rather than more traffic,” said Chris Elliott, Restaurants Canada Senior Economist, in a news release. “It’s a challenging situation for many foodservice operators and their customers; patrons are paying more, so they are dining out less, and businesses are still struggling, even after raising menu prices, to cover their rising costs.”

Alberta, British Columbia, Newfoundland and Labrador and New Brunswick all reported menu price increases of 3 per cent or more during the first six months of 2018, as businesses responded to greater operating costs in those provinces, such as higher minimum wages.

Menu prices in Ontario jumped 6.6 per cent during the first half of 2018, after the new minimum wage of $14/hour came into effect: this was the largest year-over-year increase that diners in that province experienced since the introduction of the Goods and Services Tax in 1991.

“Foodservice businesses are having to make really tough choices,” said Lauren van den Berg, the association’s national vice-president of government affairs. “They’ve done their best not to cut back on staff, and instead chose to raise menu prices. But they’ve still had to decrease the number of hours they can provide workers, and opportunities to work additional shifts.”