Canadian foodservice industry looking at a slow recovery

As the foodservice industry sees a gradual increase in traffic and sales, what does the road to recovery look like? It’s been a tough few years, with rising food costs, labour shortages, and new work-from-home patterns impacting restaurants’ return to pre-pandemic standards.

In a recent webinar, Chris Elliott, senior economist at Restaurants Canada, took a look at what recovery looks like for the foodservice industry in the years ahead.

Labour and inflation

In a 2022 survey, 74 per cent of Canadians had a positive view of restaurant workers, but 50 per cent of Canadians have said that restaurants they’ve visited have been understaffed. Labour shortage is the biggest challenge restaurants are facing, with the majority of owners operating at 80 per cent capacity or less.

Inflation is also delaying recovery, up 7.3 per cent as of July. That’s affecting diner demand as while 90 per cent of Canadians are seeing value when they visit a restaurant, with the rising costs, 37 per cent of Canadians say they will visit restaurants less often.

Elliott lists the most popular ways restaurants have responded to these challenges: raising wages, management working longer hours, reducing hours of operation, increasing pricing, and implementing more flexible work schedules for staff. Some are also cutting back on menu items to try and improve efficiency.

Planning for recovery means looking at innovative ways restaurants can cut costs and raise profits. Many restaurants are adding technology and automation as a recovery measure, including adding online apps, upgrading online reservations, enhancing mobile payment, improving POS systems, and refining inventory management.

This aligns with what guests want, too. 60 per cent of Gen Z and millennials associate technology with better order accuracy, faster service, and more convenience. Diners, particularly younger diners, want to see technology used to improve their experience; it’s up to restaurants to respond.

Prepared for recovery

Even as restaurant closures across Canada have reached 400 per month, significantly above last year’s averages of 150 to 300 closures per month, there is a light at the end of the tunnel.

During the turmoil of the last few years, restaurateurs have developed what Elliott calls “operational callouses,” becoming more resilient, stronger, and better able to adapt to change. This has prepared restaurateurs for what looks to be a slow and steady recovery for the foodservice industry.  

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