More than half the Okanagan's restaurants can't make ends meet
More than half of the country’s restaurants and food service businesses are operating at a loss or barely breaking even, but it's an even more dire situation for restaurants in the Okanagan.
A recent report by Restaurants Canada painted the dismal picture across the country, but Ian Tostenson, president and CEO of BC Restaurant and Foodservices Association, said that doesn't take into account local factors, like wildfires this summer having a lasting impact on Okanagan restaurants.
“We had restaurants in August that called us and said we didn't even have one customer today,” Tostenson said. “That's really unusual.”
The restaurant industry has always been notoriously difficult to succeed in, especially after COVID.
“The pandemic ended, and restaurants were back open. Then we were hit with inflation and we were hit with supply challenges and we were hit with labour challenges,” Tostenson said. “Those three things at once are quite unique.”
The skyrocketing cost of food has put pressure on restaurateurs to raise their menu prices. This, Tostenson explained, also means owners must be sensitive to their guests’ financial constraints.
“Inflation is affecting our pricing, but it also affects the disposable income of our guests,” he said. “People are pulling back. They are still going out, but they're buying less, they're buying differently. They may have a small snack versus a meal, maybe a glass of wine versus two.”
Labour costs are another key concern for the industry, as well as labour shortages.
“I heard a stat today, a million-dollar retail store would take about three employees (to operate), but a million-dollar restaurant takes about eight or nine,” Tostenson said. “So, you've got a higher labour cost. And, because of the shortages of labour, it's pushed our labour prices up.”
The industry relies, in part, on skilled foreign workers, Tostenson said.
“We're working with the provincial government to expedite the approvals on (foreign work permits) because B.C. tends to be kind of slow in approving it,” he said. “But we are bringing in several thousand workers.”
It appears that being a chef is also a less desirable career for the millennial and Gen Z workforce.
“We're seeing more chefs retired than... chefs coming in,” Tostenson said. “The training is expensive, it's long. It can be quite gratifying to be a chef, but it can be very gruelling.”
Okanagan restaurants also rely heavily on tourism, which came to a screeching halt this August.
In order for local restaurants to survive the slower winter months after a disappointing high season, they will need help from municipal and federal governments.
The restaurant association has been asking the federal government for an extension on business loans to help small businesses survive, Tostenson said, but their requests have fallen on deaf ears.
Totenson explained that Canada Emergency Business Account loans were given out during the pandemic.
Small businesses could apply for a $60,000 loan and, if repayments were made in time, they would only have to pay back $40,000 and be forgiven the rest.
“(The Federal Government) realized the economy was in rough shape, so they extended it. So they now made the deadline this December,” Totenson said. “Basically, at the end of this year, that's the end of it."
“It's not a question that people don't want to pay it. It's a question that they really can't. They don't have the cash to do it… Even if they can get other financing, they'll be paying very high interest rates. The government is not doing small business any favours by doing this.”
Tostenson said politicians, bureaucrats and municipalities stopped working in coordination, and small businesses are paying the price.
“We're not going to get anywhere by a federal government that refuses to give a clear answer and partnership on CEBA loans,” he said.
Small business owners also do not have the same capacity as larger companies for keeping up with constantly changing regulations.
“I talked to a business owner in Vancouver last week, and I think he typifies (a) small business (owner),” Tostenson said. “He works six days a week. He's working from nine in the morning. He gets home at twelve o'clock at night every day for six days a week. He’s exhausted and he's doing this to try to save what he has, hopefully with the view that things are going to get better. But it's not going to get better if you have everybody piling on him and bothering him while he just needs to focus on his business growth.”
Tostenson estimates that, compared to the 13% of restaurants typically lost in BC annually, the number has now risen closer to 20%.
He said the industry will continue to produce price points and an environment that allows loyal customers to continue to enjoy their favourite food services.
“I think I think we are going to bounce out of this sooner than later from this economic quietness that we're in right now,” Tostenson said. “But we always appreciate (that) without our loyal guests, we have nothing.”
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