Canadian restaurants

Canadian restaurants primed to rebound strongly

Canadian restaurants should be optimistic as the foodservice industry is expected to not only rebound but grow more than originally expected over the coming months as consumers are showing a willingness to return to restaurant dining. 

That’s according to Restaurants Canada’s 2021 Foodservice Facts report, which forecasts positive change as the country continues to move out of the eye of the pandemic storm.

With the proviso that a full rebound will take some time to materialize, the association says its current data signpost a promising return to pre-pandemic numbers:

  • As a result of high vaccination rates, annual commercial foodservice sales are expected to increase to $63.9 billion, higher than the previous prediction of $61.1 billion. Commercial foodservice sales are predicted to grow from $13.7 billion in the first quarter of 2021 to $20.7 billion by the last quarter of 2022 (adjusted seasonally).
  • In 2022, overall foodservice sales are expected to grow to nearly $80 billion, 3.8 per cent higher than pre-pandemic levels.
  • Full-service restaurants are forecast to experience the strongest sales increase, rising, from a projected $25.6 billion in 2021 to $35.2 billion in 2022.

However, Chris Elliott, Senior Economist at Restaurants Canada, noted that the association and the industry remains cautious. Canada’s tourism revenues are projected not to return to pre-pandemic levels until 2025. Foodservice spending by international tourists dropped 96 per cent from April to December 2020, while domestic tourist spending dropped 32 per cent in the same period of time

“We see our industry like a puzzle, trying to figure out what piece fits where, and figuring out how to fill in any gaps and holes in the industry,” said Elliott. “While our patios may be filling up and we can see that small pinhole of light at the end of the tunnel, it is not the time to relax or fall into old habits. We have survived the storm and now it’s time to learn from it.  It’s time to cautiously, yet optimistically, finish the puzzle. ”

Labour shortages, increased costs, higher debts

Some of the biggest hurdles of the recent months for Canadian restaurants have been labour shortages, higher food and overall costs, and higher debts. Hundreds of thousands of employees across the restaurant industry have been laid off as a result of restaurant shutdowns, and more than 12,000 foodservice establishments have been forced to permanently close their doors since the start of the pandemic. 

The report predicts that some labour shortages will continue as the hospitality sector begins to recover and open back up, as they were already an industry-wide problem pre-pandemic. Only 39 per cent of restaurant operators expect to return to pre-pandemic staffing levels in 2022 and 20 per cent expect to return in 2023.

However, 97 per cent of Canadians believe that restaurants provide a vital source of employment, highlighting that consumer awareness of hospitality and foodservice staff has increased during the pandemic.

In addition, operational costs, food and menu prices and labour costs will continue to rise as the industry heads into the final months of 2021 and well into 2022.

In an attempt to mitigate that toll, 47 per cent of foodservice operators said they would increase their menu prices four over the next 12 months. As the industry emerges from the pandemic, paying off debt and lowering operating cost remain the top two priorities among foodservice businesses.

Reasons to be positive

Despite the trauma of the pandemic, the last 18 months has precipitated some change that should be a boost for the industry in the long run. COVID-19 gave restaurants the opportunity to step back and truly focus on their businesses, seeing what works and what didn’t and finding new ways to adapt to challenges brought about by the pandemic.

Customers are craving the opportunity to return to indoor dining in Canadian restaurants to experience the moments and memories they were able to have pre-pandemic. 94 per cent of Canadians say restaurants are an important part of their communities and they want to continue to support them.

While Canadian restaurants should and will continue to offer takeout and delivery, some of the rapid rise in off-premises consumption will likely fall again to be replaced by the kind of consistent indoor dining that has been off the menu for so much of 2020 and 2021. For instance, 50 per cent of 18-34-year-olds surveyed said they will order delivery less post-pandemic as compared to during the pandemic.

“It’s clear Canadians want to return to the way things were before coronavirus hit, and indoor and in-person dining at restaurants are part of this transition to post-pandemic life,” added Todd Barclay, President of Restaurants Canada.

“We realize the value that restaurants bring to Canadians and their communities, and we need to be ready to welcome them back with open arms. Restaurants Canada is working with all levels of government to help the industry with the transition from survival to revival, so they can welcome Canadian diners back with open arms.