Restaurant owners facing ‘significant pressure’ as sales increase, but profits slide

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Sales are up, but profits are down.

Those are the conclusions drawn in Restaurants Canada’s latest quarterly report, which found that in spite of stronger-than-expected sales 67% of Canadian eateries were reporting lower profits than they were a year ago and 44% said they were seeing fewer customers walking through their doors.

“Stronger sales don’t necessarily mean healthier restaurants,” said Chris Elliott, the organization’s chief economist and vice-president of research.

“While industry sales have exceeded expectations, rising food and labour costs, softer guest traffic and limited room to increase menu prices are putting significant pressure on restaurant profitability. That disconnect is shaping operators’ expectations for 2027.”

Pessimism on the menu

Canada’s $129-billion restaurant industry employs 1.2 million workers, making it the country’s fourth largest private-sector employer.

Operators were not expressing much confidence about what the future holds with 44% saying they were pessimistic about next year, compared to 30% who said they were optimistic about it.

Thirty-eight per cent expected their profits to continue to slide, while only 21% said they were counting on things improving.

Restaurant owners were also paring back their hiring with 29% saying they expected to employ fewer staff next year. Only 9% said they planned to add to their employment rolls.

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All eyes on federal budget

Kelly Higginson, Restaurants Canada’s president and CEO, said the industry will be watching next week’s federal budget closely — seeking measures that restore business confidence and improve affordability.

“Restaurants are being squeezed between rising operating costs and consumers who simply can’t afford higher prices,” Higginson said.

“When restaurants can no longer make the economics work, Canada loses far more than places to eat — Canadians lose jobs, farmers and food producers lose customers and communities across the country lose essential economic activity.”

bpassifiume@postmedia.com
X: @bryanpassifiume

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