CHARLEBOIS: The bleeding from the restaurant continues


Ordering online for delivery or pickup is now almost the norm for many consumers.

Content of the article

After a series of lockdowns and closures, restaurants are still not out of the woods. Far from there.

Advertisement 2

Content of the article

Over the past year in Canada, restaurant closings have exceeded openings by 43%. The industry continues to shrink.

Content of the article

Inflation-adjusted foodservice sales will be about 11% below 2019 levels by 2022 and could top the $100 billion mark, according to Restaurants Canada’s latest report. Traffic in full-service outlets is down 9%, and for quick service it is down 5%. Still, these are encouraging numbers.

The annual report is of course imbued with the optimism and resilience that characterize the sector. But with both a possible recession and higher interest rates on the horizon, consumers will have to make choices and change their habits. With a tighter budget, many consumers will eat out less often. We estimate that on average, 27% of our current food budget is spent on food consumed outside the home, in some type of restaurant. Before the pandemic, the percentage was over 35%, and getting back to that percentage will take time, maybe even a few years.

Advertisement 3

Content of the article

But the report is a bit surprising in many ways. On the one hand, there is not a single word about the phenomenon of working from home. We estimate that by 2025, nearly 40% of the Canadian workforce will be working at least one day a week or more from home. A more domestic, more sedentary market does not have the same relationship to food as a consumer market that commutes daily.


We apologize, but this video failed to load.

The Shake Shack chain in the United States, which operates more than 6,000 restaurants worldwide, including a few in Canada, has become a model case of strategic pivoting during the pandemic. The chain’s turnover is around 500 million dollars a year. In March 2020, their online sales were practically nil. Today, 43% of their sales are made online, through phone applications. In fast food, only 16.5% of consumers will take their meals there. Before the pandemic, this percentage was 33.9%. Ordering online for delivery or pickup is now almost the norm for many consumers.

Advertisement 4

Content of the article

So it’s no surprise to see other chains, like Subway, copying Shake Shack and relying heavily on their own app. Skip, who has just laid off 350 employees, knows this only too well. This e-commerce platform, as well as Uber Eats, Doordash, and others that offer meal delivery from partner restaurants, are seeing their sales affected by competitors who recognize the potential of a virtual market. Even grocers are improving their service and relying on online shopping, and they are improving. Before the pandemic, the restaurant industry almost had a monopoly on delivery and counter service. This is no longer the case.

Of course, some of the major headwinds affecting the sector include inflation and labor issues. With inflation, as menu prices increase, the number of choices decreases. Less waste, less cost. We may see more and more restaurants with a service that offers only one or two dishes a day, as this provides more predictability for back office staff. Several European restaurants are already doing this. Demand becomes more manageable, as do costs.

Advertisement 5

Content of the article

  1. Meats like chicken are a staple in the diets of many people in Canada.

    CHARLEBOIS: Politicizing proteins

  2. People wait outside the LCBO to buy alcohol in Toronto, April 9, 2020.

    CHARLEBOIS: Does Canada drink too much?

Regarding labor issues, Restaurants Canada estimates that the sector has had between 150,000 and 170,000 vacancies for some time. The sector currently employs 271,000 fewer people than in 2019, before the pandemic hit. The difference is huge. Many establishments will close earlier or open less often. Operators will rely more and more on robotics, which can already be found in several businesses, both in the kitchen and in the dining room.

The sector is clearly redefining itself, but the bleeding continues. Emerging from a tumultuous period with a firm desire to adapt to a market that is difficult to predict, many establishments will not survive it.

Interestingly, the report notes a few trends to watch, including increased demand for local foods, comfort foods, and globally inspired foods and flavors. Talk about paradoxes.

— Dr. Sylvain Charlebois is Senior Director of the Agrifood Analysis Laboratory and Professor of Food Distribution and Policy at Dalhousie University.

Advertisement 1


Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. See our Community Guidelines for more information and details on how to adjust your email settings.


About Author

Comments are closed.