Summer is usually a time of great enthusiasm and optimism for the restaurant industry as the warm weather and increase in tourists make it a critical time for restaurant owners to grow their sales. Yet despite the summer being the peak season for restaurateurs, nearly half of foodservice operators are feeling pessimistic about the future.
According to Restaurant Canada’s Q2 2023 Restaurant Outlook Survey, 31% of respondents feel negative or concerned about the future, while another 17% said they feel discouraged or very concerned about the future. This sentiment is shared across all sectors – quick-service restaurants (QSRs), table-service restaurants and ‘all other foodservice’, including institutions, accommodations and bars. By contrast, very few restaurants reported feeling very optimistic about the future.
This is due to many restaurant operators facing rising costs and lower demand while dealing with mounting debt levels and an always-present potential economic downturn. As a result, 84% of restaurant companies had lower profits in Q2 2023 compared to Q2 2019. Even for companies that said guest counts and sales are up, 73% still reported lower profitability in Q2 2023 compared to Q2 2019.
In contrast, a scant 5% have higher profit levels in Q2 2023 compared to 9% in Q1 2023, the opposite of what we would typically expect, as profits tend to increase in summer.
As a result, one in four independent operators could close their business within the next two years. Already in just the first five months of 2023, there were 303 bankruptcies in the foodservice industry. The foodservice industry has not experienced more than 300 bankruptcies in the first five months of the year in more than a decade. In 2022, restaurant bankruptcies didn’t surpass the 300-unit mark until August; in 2021, it took until November to reach 300 bankruptcies.
As the Chief Economist and Vice President, Research for Restaurants Canada, Chris Elliott manages and produces a comprehensive research program that has made Restaurants Canada a leading source of information for and about Canada’s $100-billion foodservice industry. Chris tracks and analyzes key industry and economic indicators and translates them into member reports and publications. He also provides research to support Restaurants Canada’s lobbying efforts on issues that affect foodservice operators – from payroll taxes to food costs.
Chris has worked with Restaurants Canada for over 20 years, has a Bachelor of Arts and Master Degree in Economics and specializes in economic modeling and forecasting.