Calgary restaurants and bars facing rising costs and continued pandemic-related debt are preparing for another hit to their bottom lines later this week, which has industry advocacy groups calling for relief.
Several restaurants in the city announced closures in recent weeks, including the chain restaurant Buffalo Wild Wings.
The company confirmed to Global News it was closing both of its Calgary locations, but did not provide a reason behind the decision.
“You’re seeing it at the chain level, and you’re seeing it at the small, independent owner level as well,” said Ernie Tsu, president of the Alberta Hospitality Association and owner of Trolley 5 Brewery. “At the end of the day, that is still jobs that are lost inside our province.”
Although Alberta food service sales are returning to levels seen before the COVID-19 pandemic, Tsu said those sales are not always translating to profit for some establishments due to increasing costs on top of already thin margins.
“We have been seeing great support from the public,” he said. “But the rising costs and the hard costs of goods to restaurants across the province, that’s where the largest challenge has been.”
According to national industry lobby group Restaurants Canada, food and beverage costs have increased 15 per cent, labour costs jumped 12 per cent and insurance is up 20 per cent, with other costs like rent and interest rates are also taking a bite out of bottom lines.
Restaurants Canada said 47 per cent of its membership is either operating at a loss or breaking even, up from just 13 per cent pre-pandemic.
“There’s only so long you can continue in business when you’re losing money every month,” said Mark von Schellwitz, vice-president of Western Canada for Restaurants Canada. “What we’ve been asking governments to do is look on the inflation side be part of the solution instead of part of the problem.”
As part of its advocacy work, the organization has lobbied the federal government to extend and restructure federal loan repayments for restaurants like the the Canada Emergency Business Account (CEBA) program.
The CEBA program offered interest-free loans of up to $60,000 to small businesses and not-for-profits at the height of the pandemic, with 898,271 businesses approved for the loans.
If the loan isn’t repaid by the end of 2023, five per cent annual interest will be added, with varying levels of debt forgiveness depending on the amount repaid before year’s end.
Restaurants Canada wants the federal government to end the repayment of the loans by three years, and to scale down the forgivable portion of the loan to incentivize timely repayment.
“We’re only having about 20 per cent of our members who are saying, ‘Right now, we will not be able to start paying this off by the end of the year,'” von Schellwitz said. “That’s why we as Restaurants Canada put forward what we think is a real win-win solution on that to extend the repayment terms of CEBA.”
However, further costs on restaurants and bars, including another jump in the carbon tax, are slated to take effect this weekend.
On April 1, the federal beer, wine and spirit excise duty is set to jump by 6.3 per cent; its biggest jump in 40 years.
Cael Tucker, a co-owner of Tailgunner Brewing Company in Calgary, said the increase will be felt most by smaller brewers rather than the larger conglomerates.
“For us, it translates into almost 30 cents a can,” Tucker said. “When you start getting into those numbers in a highly competitive arena like the craft beer industry, it really puts small business and craft breweries in general in peril.”
April 1 will be bittersweet for Tailgunner with the incoming increase, as the brewery celebrates the one-year anniversary of its taproom, but Tucker said the new costs will come with decisions.
“Price increases are difficult, we’re looking at making a few different adjustments with offering more cost-attractive beers,” Tucker said. “Our plan is to keep fighting the good fight and hopefully the powers that be will reconsider.”
Now all eyes will be on the federal budget, which will be tabled on Tuesday, to see if there is any relief coming their way.
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