Despite an increase in restaurant traffic in 2022 compared to 2021, more was needed to enable restaurant owners to offset mounting operating costs. Everything from food to labour to equipment and insurance skyrocketed at a pace not seen in decades, all while operators were concerned with paying down the debt they had already accumulated.
While guest counts dramatically improved compared to 2020 and 2021, they remained below 2019 levels. Add it all up, and the result is that many restaurant operators (43%) said that 2022 was a worse year for them financially than 2021. 18% indicated their financial performance was the same in 2022 compared to 2021, and 40% of respondents said their financial performance improved in 2022.
Factors Impacting Financial Performance
Of those whose financial situation worsened in 2022, the most significant challenges were rising food costs (94% of respondents) and rising labour costs (85% of respondents). These results were consistent across all industry segments. These increased costs were not offset by a much hoped-for increase in traffic, only adding to the challenges already facing restaurant owners. As a result, 68% of table-service restaurants and 63% of QSRs attributed the worsening financial performance to a decline in guests. In contrast, a smaller share (48%) of ‘all other foodservice” reported fewer customers.
In 2020 and 2021, wage and rent subsidies were a vital lifeline to restaurant owners, preventing tens of thousands of restaurants from permanently shutting down. Unfortunately, 2022 saw a massive reduction in these subsidies, which was much too soon because the foodservice industry had not recovered financially from the previous two years. Of the table-service restaurants that experienced a worsening financial performance in 2022, 65% attributed this to the reduction in government subsidies.
For the 40% of the industry which saw an improvement in their financial situation in 2022, the two most significant contributing factors were an increase in guest counts compared to 2021 (76% of respondents) and passing on higher operating costs through an increase in menu prices (62% of respondents).
The 2022 Q4 Restaurant Outlook Survey takes a deep dive into the factors impacting restaurants’ financial performance in 2022 and what the top priorities will be for restaurant owners in 2023.
Click here for the full report.