By Chris Elliott, Senior Economist
(Jan. 26/17) Labour concerns are the biggest issue facing foodservice operators. According to Restaurants Canada’s latest Restaurant Outlook Survey, labour costs had a negative impact on 72% of foodservice operators in Q4 of 2016. Labour costs even surpassed rising food costs as the number one issue affecting restaurateurs. Due to a recent moderation in food prices, 59% of respondents said food costs hurt their business in Q4 compared to 71% in Q3.
Alberta feels the heat
In Alberta – where the minimum wage is set to climb to $15/hour by 2018 – 87% of operators said labour costs hurt their business. This share even beat out the 83% that felt the recession impacted their business.
Other provinces don’t go unscathed
Eight provinces raised their minimum wage in 2016, with the average minimum wage climbing by 3.7% – which is 2.6 times the rate of overall inflation. Alberta, British Columbia, Quebec, New Brunswick, and Newfoundland and Labrador have already announced minimum wage increases for 2017.
Labour shortages hurt too
While government-mandated wages are climbing, operators are also sounding the alarm over labour shortages. Nearly half (48%) of table-service restaurants reported a shortage of skilled labour in Q4 – the highest share since Q4 2014.
Dealing with the challenge
Labour issues are a significant challenge for restaurant operators across the country. Wages are climbing, but it’s also more difficult to find the right workers. With the increase in minimum wage, operators have reduced the average number of hours worked per employee for the second consecutive year. Yet, healthy foodservice sales growth and an increase in the number of foodservice establishments creates a high demand for employees. Given the razor-thin profit margins of the foodservice industry, can operators look to technology and more automation without sacrificing the friendly hospitality of eating out? Only time will tell.
Read the topline findings from Restaurants Canada’s Restaurant Outlook Survey for Q4 of 2016.
Participating members get access to the full report. (Login required.)
Members only: Want to know what to expect for minimum wage in your province? Plan ahead with our Minimum Wage Outlook Bulletin for 2017. (Login required.)