Business and Operations
Challenges, recovery and rebirth for restaurants: RC Foodservice Facts report
October 4, 2021 By Bakers Journal
The industry is expected to not only rebound, but grow more than originally expected, as consumers are showing a willingness to return to restaurant dining, suggests Restaurants Canada’s 2021 Foodservice Facts report.
In April 2020, Canada’s restaurant and food-service industry experienced its lowest level of sales in over two decades. While sales were expected to improve in 2021, the third wave of the pandemic caused another shutdown, with the elimination of in-person dining affecting restaurants, food-service operators and suppliers across Canada. However, despite the setbacks and challenges, the industry has been resilient, innovating, embracing new technologies, and exploring new revenue streams. It will take some time to bounce back, but expectations for 2022 show a promising return to pre-pandemic numbers:
- As of September 2021, almost 70% of Canadians (12 and older) are fully vaccinatedAs a result of high vaccination rates, annual commercial food-service sales are expected to increase to $63.9 billion, which is higher than the previous prediction of $61.1 billion. However, the industry is tempering optimism with vaccine passports coming into effect alongside a fourth wave of infection.
- The projection of 2022 looks even more promising, as overall food-service sales are expected to grow to nearly $80 billion, 3.8% higher than pre-pandemic levels
“While the economic outlook has significantly improved, Restaurants Canada remains cautious when it comes to the timing of the recovery,” says Chris Elliott, Senior Economist at Restaurants Canada. “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. 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
COVID-19 brought about a slew of new challenges and hardships for the entire industry across Canada. Some of the biggest hurdles to overcome as a result of the pandemic include labour shortages, higher food and overall costs, as well as 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 food-service establishments permanently closing their doors since the start of the pandemic.
The pandemic is forcing the industry to re-evaluate how they recruit, pay and retain their employees, especially as restaurant owners are struggling to fill their workforce — only 39% of restaurant operators expect to return to pre-pandemic staffing levels in 2022 and 20% expecting to return in 2023.
Labour shortages, already an industry-wide problem pre-pandemic, will continue as the hospitality sector begins to recover and open back up. Workers have had to find other employment opportunities in other industries after losing their jobs in hospitality. The pandemic is forcing the industry to re-evaluate how they recruit, pay and retain their employees, especially as restaurant owners are struggling to fill their workforce — only 39% of restaurant operators expect to return to pre-pandemic staffing levels in 2022 and 20% expecting to return in 2023.
The pandemic also managed to bring up price hikes in the food-service industry and led to restaurants accumulating mounds of debt. 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. Many restaurants are already operating at a loss due to government shutdowns, and their debts seem to continue to grow as costs rise:
- 47% of food-service operators said they would increase their menu prices 4% over the next 12 months
- In a 2021 Restaurants Canada’s Q2 2021 Restaurant Outlook Survey, 81% of independent restaurants had taken on new debt due to the pandemic
- Six out of 10 table-service restaurants are operating at a loss as of July 2021
As the industry emerges from the pandemic, paying off debt and lowering operating cost remain the top two priorities among food-service businesses.
Despite the many negative effects as a result of the pandemic not all industry changes are considered bad. 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. The evaluation of their businesses allowed them to focus on creating the best experience for customers when in-person dining restarted – something that customers are very eager to return to.
Customers are ready to return to in-person dining
Customers are craving the opportunity to return to table-service restaurants and in-person dining to experience the moments and memories they were able to have pre-pandemic. 94% of Canadians say that restaurants are an important part of their communities and they want to continue to support them.
That said, takeout and delivery will continue to be offered by restaurants, especially those that had to pivot quickly to offer the service during the pandemic in order to meet new demands. But a considerable number of customers have shared they will begin to order delivery and takeout less once the pandemic subsides, as the desire to get together and socialize continues to grow.
Certain groups are more eager to return to in-person dining than others. Trends show delivery rates will remain the same post-pandemic as during the pandemic. However, differences in delivery can be seen across age groups:
- 50% of 18-34 year olds surveyed will order delivery less post-pandemic as compared to during the pandemic, being the most eager group to return to in-person dining
- 35-54 year olds and 55+ were similarly split, with about the same percentage of people preferring to order delivery less after the pandemic as those who will order about the same amount of delivery as 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,” adds 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.
Overall, 89% of Canadians are looking forward to going out to a restaurant with friends and family once the pandemic ends. With growing vaccination rates, Canadians continue to feel more comfortable about returning to in-person dining, and restaurants should continue to implement measures to enhance the customer experience and make them feel safe.
Offering a deeper dive into the Foodservice Facts Report, Restaurants Canada is hosting a free webinar on Oct. 7, 2021, to help food-service and hospitality industry professionals reach their consumers and win in today’s competitive food-service market. For more information, or to reserve your spot, visit https://info.restaurantscanada.org/foodservice-facts-2021-webinar.
More survey highlights:
- Commercial food-service sales in Canada 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).
- 97% of Canadians believe restaurants provide a vital source of employment.
- Full-service restaurants are forecast to experience the strongest sales increase, rising, from a projected $25.6 billion in 2021 to $35.2 billion forecasted in 2022.
- Canada’s tourism revenues are projected not to return to pre-pandemic levels until 2025: food-service spending by international tourists dropped 96% from April to December 2020; domestic tourist spending dropped 32% in the same period of time.
Foodservice Facts is an annual report presenting the latest food-service statistics, trends and forecasts, along with a detailed analysis of how they will affect food-service operators. The annual research report is a tool for foodservice operators and chains to plan, invest and forecast their activities for the year ahead. The full report is available to Restaurants Canada members through the Member Portal or for purchase online. To access the report, please call 1-800-387-5649 or email email@example.com.
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