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10/13/2021

Quick service restaurants ready to rebound and that's good news for convenience and gas

Nearly half of all food service establishments have been losing money every day of the pandemic.
Road sign at the roadside signaling a gas station and food services on highway. Blue board with an arrow informing services straight ahead.
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Canadian restaurant operators are finally seeing the light at the end of the dark, dark tunnel of the ongoing global pandemic. 

With re-openings happening across Canada, annual commercial foodservice sales are expected to increase to $63.9 billion in 2021. Quick-service restaurants are forecast to be the first to return to pre-pandemic levels in Q4 of 2021. Foodservice sales at full-service restaurants are predicted to rebound to pre-pandemic levels in Q2 2022 due to pent-up domestic household spending. 

We anticipate the industry to grow to nearly $80 billion in 2022, representing a 3.8% increase over 2019 levels. While this is one way to view the performance of the foodservice industry, it doesn’t tell a complete story. 

The overall size of the industry will have increased in 2022, and after adjusting for population and inflation, real per capita commercial foodservice sales will remain below pre-pandemic levels for the next few years. 

Sales at the end of this year will remain 17% below pre-pandemic levels due to the weak first half of 2021, and by the end of 2022, real per capita foodservice spending at quick- and full-service restaurants are expected to reach 97% of pre-pandemic levels.

While these are all positive developments that will lead to stronger commercial foodservice sales in Canada, we are cautious when it comes to the timing of the recovery.

As we move into fall, weak foodservice spending by international visitors, the lack of business travel and meals, the threat of a fourth wave, and continued restrictions, for many restaurants, survival is still uncertain.

As much as they would like to stay focused on welcoming back their regulars, placing more orders with local farmers and creating more jobs for the communities they call home, all these things have become a lot harder since July 4th - the day when restaurants started losing access to the federal rent and wage subsidies.

That’s because after more than a year of operating under severe restrictions, most restaurants are drowning in debt that they had to incur just to keep the lights on.

The devastating impacts of this pandemic have not been felt equally by all Canadians. The stark reality is we can’t talk about revival and recovery if so many restaurants and small business owners are still struggling to survive.

Nearly half of all food service establishments have been losing money every day of the pandemic. They now face a long and difficult road to recovery, and will likely need at least a year to return to some semblance of normal.

While some sectors might be ready to resurface, in full force, from the COVID-19 tunnel, our local restaurants are still in it. Scaling back their subsidies before they’re able to stand on their own feet again has endangered an industry that is crucial to rebuilding our country’s economy.

Something that most Canadians don’t realize is that at least 95 cents of every dollar we spend at a restaurant goes directly back into our communities. That’s because even during the best of times, a typical Canadian restaurant has a pre-tax profit margin of less than 5%.

No other sector keeps so little in profit and returns so much to our economy: 95 per cent of all restaurant revenue typically goes toward local jobs, purchases from Canadian farmers, food and beverage producers and other food service industry suppliers, contributions to charity and more.

On behalf of our hardest-hit sector, Restaurants Canada is urging the federal government to scrap the scaling back of the rent and wage subsidies. We need to keep our local restaurants in the picture so they can keep feeding Canada’s recovery — literally and figuratively.

If we want to build back a stronger, more sustainable economy that continues to reflect our country’s incredible diversity, our industry is the best place to start.


 

Todd Barclay

Todd Barclay is president and CEO of Restaurants Canada. Visit SupportRestaurants.ca to find out how you can help raise save restaurants.