Canadian restaurants are raising prices, shrinking menus and cutting hours to survive inflation and labor shortages, a new report says.
The industry continues to struggle financially, the Restaurants Canada report noted, with half of the country’s restaurants operating at a loss or just breaking even. According to the report, titled Food Service Factsfoot traffic to restaurants remains below pre-pandemic levels, with actual inflation-adjusted sales down 11% from 2019 results.
Hiring in the restaurant sector is lagging behind the overall job recovery in the country, with a workforce that as of May was 171,300 fewer than before the pandemic. Backroom positions, such as cooks, have been the hardest to fill, with most restaurants operating at 80% of normal capacity due to labor shortages, the report said.
Menu prices at full-service restaurants are expected to rise 7.8% year over year by the end of 2022, with about a third of establishments expecting prices to rise 15% . Fast food menu prices are expected to increase by 7.1% by the end of the year.
Still, price hikes are just one way restaurants are responding to inflation, according to the report. Some establishments are also decreasing the number of items on the menu, reducing portions, changing suppliers and absorbing cost increases, according to the report.
“The at-hand solution to rising food costs is simply to reduce portion sizes,” said Philman George, business leader of High Liner Foods, in the report. “The vicious circle is in the cumulative effect of labor shortages,” he said. This gives the customer not only less food for their money, but also a potential decrease in service levels to which they were accustomed before the pandemic. »
Instead, George said the restaurants that will be successful are those that tackle rising food costs with a “multi-pronged approach”, including creativity to source ingredients at lower cost. cost and simplification of menus to reduce food waste.
Hotel room prices on the rise
For their part, Canadian hotels will return to pre-pandemic revenue next year, two years earlier than previously expected, according to real estate firm CBRE.
The Canadian hotel market should end 2022 with revenue per available room at around 92% of its 2019 level, before the start of the health crisis, the firm predicted. Moderate revenue growth will continue through 2023, CBRE continues, with hotel operators pushing for higher rates. Revenue per available room is expected to reach $107 next year, according to its projections.
Revenue per available room is a measure of a hotel’s performance calculated by multiplying its average daily room rate by its occupancy rate.
CBRE’s forecast of $107 would represent a 70% increase over industry performance in 2021, which was hampered by health restrictions intended to limit the spread of COVID-19. According to CBRE, half of Canada’s major urban markets are expected to see revenue per available room in excess of $100 in 2023. This amount would reach $182 in Vancouver, $135 in Montreal and $129 in Toronto.
“The strength of leisure travel and the rapid rebound in the average daily rate in many cities are leading to strong hotel performance. Overnight visits from the United States continue to recover, along with visits from other key international markets,” CBRE Director of Hotels David Ferguson observed in a press release.
“However, travel from certain key markets, notably the Asia/Pacific region, is still difficult. Cities and hotels that offer business travel, meetings and group travel face a slower recovery. »