Nearly 34% of Canadian restaurants are still struggling with inflation and rising product costs, leaving them in deficit before the end of 2023, Restaurants Canada has found.
While more than a third of restaurateurs are running a deficit this year, it was just 7% before the pandemic, according to the organization’s annual report, consulted by the Globe and Mail.
There are also 17% that have not exceeded the break-even point, compared to 5% five years ago.
Still, total foodservice sales will reach $110 billion by the end of the year, higher than the $100 billion in 2022 and $95 billion in 2019.
Therefore, restaurateurs may not necessarily make a profit due to the increase in several operating costs, such as food prices, insurance, and salaries.
According to Kelly Higginson, president of Restaurants Canada, this situation is a direct result of the pandemic.
“We have operators who are heavily in debt […] and who has to negotiate the same interest rate issues that Canadians deal with every day. And we have very high inflation that has just hit the industry,” she told the media.
To counteract the situation, restaurateurs are forced to increase the prices of their menus at a record pace. However, it remains below the cost.
For example, according to Statistics Canada, menu prices rose 6.4% last March, while food costs rose 9.1% over the same period.