Will the LCBO strike affect restaurant revenues?

Summer is a very busy time for restaurants as they fill their patios and indoor spaces. Wine and spirits account for a significant of restaurant revenues, and as LCBO is the primary provider for restaurant wine and spirits, operators are hoping for a swift end to the labour dispute.

According to Restaurants Canada, Ontario’s bars and restaurants generate $44.5 billion dollars in revenue each year and purchase $15.6 billion dollars in food and beverage. With more than 38,000 food service businesses, the foodservice industry in Ontario directly employs nearly 445,000 individuals. An estimated 14,000 locations rely on alcohol sales – including products they purchase from the LCBO – as a key revenue stream, in addition to thousands of other businesses depending on restaurants and bars for goods and services.

It’s uncertain how long the strike will last, but Ontario Public Service Employees Union president JP Hornick said the union is prepared with a “very healthy strike fund” and that “we can weather a strike as long as necessary.” This week, the LCBO plans to open five locations that will exclusively serve licensees, including bars, restaurants, nightclubs and lounges, allowing them to shop by the bottle rather than the case,

“We have measures in place across our inventory build, our warehouse operations, and our fulfillment approach that reflect the importance of beverage alcohol availability to our wholesale, especially during the busy summer months,” said an LCBO spokesperson in a statement.

While many of the larger restaurants and chains were able to stock up with supplies, smaller restaurants may not have had access to enough financial reserves to order excess supplies ahead of the strike.

“Potential disruptions in alcohol supply reaching our establishments could have significant impacts on our sector, particularly at a time when operators are already faced with so many challenges,” said Kris Barnier, Vice-President Central Canada at Restaurants Canada. “Many restaurants are still in recovery from pandemic debt, and now dealing with a one-two punch of weaker consumer spending combined with operating cost pressures that have grown by more than 20 per cent in the last two years alone.”

As the days and weeks unfold, the foodservice industry is hoping for a quick resolution in bringing the labour dispute to an end, for a minimal disruption to their summer sales.