The restaurant industry in Canada has prepared for a tough first half of 2024. According to the Conference Board of Canada, the economy’s lackluster performance in the second half of 2023 will spill over into the first months of 2024, with minimal growth expected. Once again, restaurants will be left to navigate uncertain times and monumental economic challenges.
New data from Restaurants Canada has indicated that 62 percent of restaurants have operated at a loss or barely breaking even, which is up nine percent from July 2023 when it stood at 53 percent. This is compared to 10 percent pre-pandemic. This alarming statistic underscores the immense pressure and lackluster performance on the industry. It also led to a notable upsurge in closures in 2023, with bankruptcies up 44 percent – the highest annual figure in a decade.
One of the main factors driving this difficult environment is weak sales, which are expected to persist in winter/spring of 2024. As consumers continue to curtail their discretionary spending, the foodservice sector bears the brunt. Disposable income is a critical factor influencing foodservice sales, as customers tend to dine out more frequently when they have greater financial flexibility.
A recent survey conducted by Restaurants Canada reveals the future viability of many operators hinges on the upcoming weeks and months. The uncertainty is palpable, with one operator stating, “If we make it past January, we could possibly stay afloat.” This sentiment echoes the widespread concern among industry professionals who are closely monitoring government policies for signs of inflation relief.
As restaurants hang on, governments must refrain from imposing any further costs, like the scheduled 4.7 percent federal alcohol excise tax that is set to take effect on April 1st and is being fought against by the industry. Owners need a chance to catch up and find profitability again without getting knocked down by added costs.
To read more about the global industry, click here.
