The Blubber

A recent survey of Canadian restaurant owners reveals that half of food service businesses are either operating at a loss or barely breaking even.

While sales have improved since the COVID-19 pandemic, profits remain low due to soaring operating costs and foot traffic that has yet to return to pre-pandemic levels, according to Restaurants Canada’s Foodservice Facts 2023 report.

The industry is facing a reversed scenario compared to pre-pandemic times. Before March 2020, only 7% of restaurant businesses were losing money, and 5% were breaking even. At that time, 36% of operators reported pre-tax profit margins of 10% or higher. Today, however, only 12% of restaurants are achieving double-digit profit margins, the report states.

As of March 2023, 34% of restaurant businesses were operating at a loss, and 17% were breaking even, Restaurants Canada reports.

Despite these challenges, the food service industry hit a milestone last year, surpassing $100 billion in sales for the first time, with 22 million Canadians dining in or ordering takeout daily. The report projects sales to grow to $110.2 billion in 2023. However, when adjusted for menu inflation and population growth, real per capita sales are comparable to 2012 levels, with food service spending still 9% below 2019 levels.

The financial strain remains significant, with 75% of table-service restaurants and 51% of quick-service restaurants still carrying pandemic-related debt. Alarmingly, one in four independent table-service restaurants surveyed expressed doubt about ever recovering from their pandemic debt unless conditions improve.

The report comes amid calls for the federal government to extend the repayment deadline for the Canadian Emergency Business Account (CEBA) loans by another year. During the pandemic, small businesses and non-profits, including restaurants, accessed loans of up to $60,000 through CEBA to help them stay afloat.

B.C. Premier David Eby, along with other provincial leaders, recently urged the federal government to extend the CEBA repayment deadline. The current deadline, already extended, is January 18, 2024, for businesses to qualify for partial loan forgiveness.

“Canadians are feeling squeezed by the rising costs of housing, groceries, and other daily essentials. Small businesses are no different,” Eby said in a statement. “Just as many small businesses are beginning to recover from the pandemic, they’re now being hit hard by rising inflation and interest rates.”

According to the B.C. government, over 122,000 businesses in the province were approved for CEBA loans totaling more than $6.6 billion.