Half of Canadian restaurants operating at a loss or ‘just breaking even’

Restaurants are facing a bumpy road to recovery due to rising expenses, low customer counts, high debt and low profitability, according to Restaurants Canada.

Restaurants are facing a bumpy road to recovery after years of pandemic-related challenges. They’re now dealing with rising expenses, low customer counts, high debt and low profitability, according to Restaurants Canada.

“Restaurant operators are struggling financially, with half of our operators operating at a loss or just breaking even,” said Christian Buhagiar, the CEO of the national organization.

“Those that are making money, it’s like two to three per cent, so those margins are extremely thin,” added Mark von Schellwitz, Restaurant Canada’s vice-president for Western Canada.

“They’re doing everything they can to get through this.

“It’s a resilient and innovative industry and we’ve had to do all sorts of things over the last couple of years just to keep our doors open. But as a result of that, we do have what I call the post-pandemic hangover and there are a number of obstacles that are preventing us from fully recovering, the labour shortage being one of them, the inflationary costs on everything — all our inputs are going up significantly.

“Plus, with 85 per cent of our members taking on debt during the pandemic, you’ve got a rising interest rate environment.

“And, as a result of the labour shortage alone, we’ve got a lot of our restaurants only operating at about 80 per cent capacity because they simply don’t have the staff to be fully open,” von Schellwitz said.

Restaurants Canada expects nominal sales to return to pre-pandemic levels before the end of the year. Traffic still remains below 2019 levels.