First the pandemic, now prices: Alberta restaurants struggling with high inflation

Click to play video: 'High inflation hurting Alberta’s restaurant industry'
High inflation hurting Alberta’s restaurant industry
The pandemic hit the restaurant industry hard, and now there is another challenge. As Sarah Komadina explains, high inflation is hurting Alberta's restaurants and some wondering how they will survive the next crisis – Jun 17, 2022

Transit Smokehouse & BBQ opened in September 2021, inside the historic Transit Hotel in northeast Edmonton.

It’s been a difficult journey, co-owner David Egan said, starting with a 10-month delay to get the proper permits from the City of Edmonton.

Then when the restaurant did finally open, new COVID restrictions were added. Now, the high rate of inflation is creating big challenges.

“This inflationary crisis has come in and I think people have a lot less disposable income… I have a house myself and we are struggling too to pay our bills,” Egan said.

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Canadians are coping with the highest levels of inflation since 1991: last month, Statistics Canada reported the inflation rate for April rose 6.8 per cent compared with a year ago. That’s the highest since January 1991.

The federal agency is expected to release May’s inflation report next week. Egan said they are seeing it with their main ingredients.

“Our signature dish is smoke beef brisket and our whole sale costs of beef have almost doubled of the last year.”

Click to play video: 'New restaurant set to open in Edmonton’s iconic Transit Hotel'
New restaurant set to open in Edmonton’s iconic Transit Hotel

The pain is being felt across the province.

Concordia University economist Moshe Lander said the food and beverage industry is being hit from three main sources: rising rents, gas prices and grocery bills.

“The food industry is going to see rapidly rising rents on their commercial space. They are going to see that gasoline prices are affecting them — if not directly, but indirectly,” Lander said.

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“Much of the food that they are using, is imported, to get those finest ingredients many are not coming from Canada — or if they are coming from Canada, they are not coming from inside Edmonton. Embedded in that higher grocery cost is going to be gasoline to transport those things.”

Lander said restaurants may not actually increase costs, but try out solutions such as shrinkflation — serving smaller portion sizes for the same price.

“It’s the same preparation, it’s the same chef, it’s the same everything, it’s just that you’re getting 80 per cent of what you were getting before. That effectively is a 25 per cent price increase, but it’s not an actual price increase.”

In some dire cases, Landers said not every business will make it.

“It’s a really competitive industry that they don’t have the capacity to pass that on fully to their customers, for risk of losing them to other businesses.

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“So what ends up happening is their profits are eliminated entirely and they’re forced into bankruptcy.”

Ernie Tsu, with the Alberta Hospital Association and owner of Trolley 5 Brewpub in Calgary, said people are supporting restaurants and they are grateful for it. But after two years of the pandemic, this is just another layer of problems.

“Every owner is worried about inflation. We are dealing with so much right now — we’ve got the labour shortage, as well as cost of good are going screaming up.”

Click to play video: '‘We’re paying more for everything’: Canada’s inflation rate soars beyond predictions'
‘We’re paying more for everything’: Canada’s inflation rate soars beyond predictions

He said restaurant owners are doing what they can to get people in the door.

“We still seeing great support from the public heading to their local restaurants and their local pubs, but again we have seen a really good move from restaurants across the province to try and look at daily features or some better ways to still offer some quality from quantity,” Tsu said.

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“They are going to have to look at every issue, from raising prices, menu engineering.”

Egan said they are looking to find creative ways to keep business alive. They have turned to delivery apps and catering. He said his team is also considering a food truck. He just hopes his efforts will help keep his doors open.

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