Half of all B.C. and N.S. restaurants are losing money

Article content

It’s been a very bad year for many restaurateurs and barkeeps.

Article content

Article content

The British Columbia food service industry has lost 11,000 jobs and recorded the highest number of restaurant bankruptcies in the province’s history. Alcohol sales at drinking places, such as bars and taverns, in B.C. as well as Nova Scotia fell by 12 per cent compared to last year.

Industry players are not surprised. Most Canadians are struggling to make ends meet and so are the places they go to eat and drink, Mark von Schellwitz, vice-president, Western Region, at Restaurants Canada, said.

Article content

Sales at bars and taverns are down across the country by about $36 million, or two per cent, from January to September this year compared to the same period last year, according to Statistics Canada data. Both Ontario and Quebec followed the trend with a dip in sales of 2.7 per cent ($9.7 million) and 2.5 per cent ($14 million), respectively.

Article content

The affordability crunch is hitting sales among younger people especially hard, but costs for operators are going up as well.

Restaurant and bar owners in places such as Vancouver and Whistler, B.C., are contending with some of the highest rents in the country, von Schellwitz said. The same goes for operating costs, which have increased more than 20 per cent over the past couple of years. That includes food costs as well as utilities, insurance and equipment.

“The final issue that is really hurting us, which, of course, everybody else is hurting and struggling with, is affordability as well,” von Schellwitz said. “The number of guests we’re seeing is going down and their average bill is going down, too.”

Brendan Doherty, owner of the Old Triangle Irish Alehouse in Halifax, is one who is feeling the pinch. He said sales have been down by single digits this year compared to last. Summer alcohol sales were definitely a little softer than the industry was expecting.

Article content

Article content

“Every person is feeling the economic crunch these days and when spending goes down, the first thing to cut out is food and beverages, of course,” he said.

Bars and restaurants are struggling to get people in the doors, Doherty said. If things persist, the industry could be as badly off as four years ago, when businesses were struggling to stay afloat during the pandemic.

“Who would have thought based on what we went through in the last four years that the next four years might even be harder than COVID times?” Doherty said.

Since opening its doors about 25 years ago, the Old Triangle has become sort of a downtown Halifax landmark, which helps Doherty’s confidence that his pub will be able to weather the storm.

It’s the kind of optimism needed in the industry.

“Those who’ve been in restaurants for a long time know it’s kind of a boom-and-bust cycle,” he said. “We’re well-versed in economic downturns. You cut costs where you can and try to keep prices as reasonable as possible.”

Nearly half of Nova Scotia’s restaurants are operating at a loss or merely breaking even, according to the province’s restaurant association. In B.C., it’s a bit more than 50 per cent, von Schellwitz said.  Pre-pandemic, that number was about 12 per cent.

Article content

Another twist is the shift to takeout, which has risen to nearly one-third of sales, he said. Virtually none of those orders include alcohol.

Still, von Schellwitz and Doherty are optimistic that the GST/HST tax holiday will be a shot in the arm. What would help more, von Schellwitz said, would be for the government to permanently eliminate the tax on food.

But not every bar in Halifax is complaining. Charlie’s Club, one of the city’s oldest watering holes, has had an increase in traffic. Not a huge bump, but in the single digits, manager Todd Matheson said.

Unlike other bars, Charlie’s doesn’t have to worry about escalating rent because the building is paid off. With a clientele aged 19 to 70, Charlie’s is open 365 days a year and offers some of the best beer deals in the city. A pint ranges from $5.25 to $7.50.

“Most bars, you’re paying $9 to $11 downtown for a beer,” Matheson said. “You have four or five beers, that’s $55, when you could easily buy a flat of beer and then go out.”

But what does make him a little nervous is the culture change affecting the industry.

“It’s a bit of a worry that fewer people are drinking,” Matheson said. “We’re not concerned about our establishment; we are worried about the industry as a whole.”

• Email: arankin@postmedia.com

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content