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Restaurants’ Return to Normal Is on the Horizon — but Key Challenges Still Exist

restaurant owner standing in door
restaurant owner standing in door

Restaurants Canada shares insights on trends and challenges in Canada’s restaurant industry and what makes Canada this summer’s unique culinary destination.

Off-premise dining is here to stay. During the pandemic, Canadians relied heavily on takeout, delivery and drive-through to order food, pushing restaurants to adjust to accommodate the new ways to dine. With restaurants heading back to pre-pandemic norms, guests are returning to restaurant dining rooms, but the use of off-premise dining is expected to remain strong in the coming years as the convenience has become a convention in the way we dine. 

Virtual kitchens continue to grow in popularity. While this was a trend we initially saw gaining popularity before 2020, the pandemic led businesses to reconsider moving to a smaller footprint to offset costs and use space more effectively. Virtual or ‘ghost kitchens’ offer no storefront or seating and allow the business to focus on generating sales purely through off-premise dining.

Green packaging is becoming a must-have. The move towards greener ways of business has been on the rise for many years, but new environmental Extended Producer Responsibility and Single-Use and Takeaway Item regulations aimed at reducing plastic takeout packaging are applying pressure to the shift. 

As we emerge from the impact of the COVID-19 pandemic, what challenges does the foodservice industry still face?

Aside from the obvious being debt, with approximately 8 out of 10 restaurants having taken on debt due to COVID-19 and at least two-thirds of these businesses needing at least a year and a half to recover, we asked our members what they see as the top challenges currently facing the foodservice industry; food costs rank first (94%); labour costs were next at 80%; followed by labour shortages (75%), with debt placing seventh (50%) right behind utility costs.  

Adding further fuel to the fire as businesses try to rebuild after two years of lockdowns and restrictions – inflation is skyrocketing. In terms of food prices, consumers paid significantly more for proteins and other food products at retail stores in March 2022 compared to March 2021. As a result, restaurant operators are expecting to raise their menu prices by an average of 7.1% over the next 12 months to offset costs. Even during the best of times, the average foodservice establishment keeps less than 50 cents of every $10 spent on a restaurant meal, the rest goes back into the economy.

In what ways is technology pushing the industry forward?

One word – automation! During the pandemic, restaurants looked for new, sometimes unconventional, ways to keep their business running. Some turned to QR-codes for menus, offered third party delivery for the first time, or even shifted to ghost/virtual kitchens. Even as restrictions lift, restaurants will need to constantly innovate to offset the next big challenge: labour shortages.

In the summer of 2021, there were a record 150,000 job vacancies in the foodservice industry. This led to a job vacancy rate of 11%, by far the highest rate of any industry, more than double the industrial average, leaving everyone with the question: how to grow and expand in an era with chronic labour shortages? As a result, we see a number of restaurants focusing on automation and technology to grow. While some restaurants are looking to add more technology and automation in the coming years, solutions like robot servers are not on everyone’s menu. The reality is that many of these exceptionally tech-forward solutions simply wouldn’t provide the human interaction and personalized service that guests expect when dining out. After all, this is a service and hospitality-oriented business. Still, quick-service restaurants across the globe have successfully introduced automation and are currently exploring new opportunities for robotics and Artificial Intelligence.

For international travellers or Canadians looking to explore their own backyard this summer, what makes Canada a unique culinary destination?

When considering Canada’s culinary scene, it’s hard to think of one style. We live in a country truly unique to any other, in that we have so many different cultures coming together to bring our society to life, each culture bringing with it a unique style of cooking, unparalleled flavours and ingredients, and dishes that tell stories from around the world. Many creative world-class chefs also call Canada home, creating new menu items fusing various ethnic cuisines into creative new ones. We’re also known for our regionally influenced foods like local seafood, beef, cheeses, wild game and traditional Indigenous dishes, which tell the story of our land’s original heritage and culture.

All of these different cuisines coming together with some of the best locally grown food and ingredients in the world, along with exceptional service, make for an experience any traveller, both international, and domestic will savour.

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