Restaurant owners in Edmonton say industry is still struggling

Restaurant owners in Edmonton saythey are struggling to balance customer expectations with rising food costs as inflation takes the appetite out of dining out.

According to an Augustreport by industry group Restaurants Canada, half of Canadian restaurants and food service companies reported operating at a loss or just breaking even.

The report said before the pandemic, only seven per cent of the industry was operating at a loss compared to33 per cent today. It said overall 84 per cent ofrestaurants reported lower profitability compared to 2019.

The cost of ingredients, insurance and utilities have continued to rise in Alberta and many businesses are finding it difficult to turn around a profit.

But that alone hasn't been the driving force behind declining profits.

The Agri-FoodAnalytics Lab at Dalhousie University surveyed Canadians this year about their attitudes towardrestaurants and the higher prices they are now having to pay.

More than81 per cent said dining out was expensive and that they had to rethink where they were going out to eat.

Edmonton AM7:23How serving tables has changed since the pandemic and inflation took hold

Restaurants in Canada are reporting declining profits, due to the rising costs of labour, rent and food. But how are their customers feeling about dining out? We stopped by two Old Strathcona restaurants, Pals and The Next Act, to speak with servers and managers about how things have changed.

Mike Rebalkin and two partners ownfive restaurants in Edmonton's Old Strathconashopping and entertainment district: MEAT, the Next Act, Marlo, Pip, and Pals.

Rebalkin told CBC's Edmonton AM that coming out of the pandemic was difficult.

"We make everything from scratch and we try to have a really high value to all of the food that we put on the table," he said.

"Beef prices, dairy prices, you parlay that with increasing energy costs and even interest rates, it's kind of like a triple whammy."

Rebalkin said cutting labour costs when possible is something businesses could control, but inflation hasn't made it easy.

He said his restaurants have gone through some menu changes and increased their prices.

If the price reflected its actual cost, a burger at the Next Act would cost $24, Rebalkinsaid, adding there was no way they could sell a burger that expensive.

"It's $20 now, which is a ceiling that was really hard to break through," he said.

"It's the way it has to be in order for us to be relevant and pay for our staff and be marginally profitable."

Percy Wiredu is one of the owners of El Jardin which opened this summer in the Mercer Warehouse in downtown Edmonton.

Wiredu and his business partner Hifa Maleki opened El Corazon in Glenora's West Block last year.

"We're in this for the long haul, so over time we know that with our operations and team, we'll be able to overcome [the current economic state]," he said.

Many things are out of the owner's control but that's where businesses should evolve, he said.

Erin Mills has worked in the restaurant industry for over 10 years. She has been serving at Pals one of the restaurants owned by Rebalkin and his partners since it opened over a year ago.

"I think even at grocery stores people are struggling so much," Mills said.

"I think when people are eating in restaurants a lot of the time they're more interested in the experience and the service."

Lisa-Marie Wasswa, a guest experience manager at El Jardin, agrees and saysinflation has made people more intentional about how they spend their money.

"Just from what I know previously, I do find that I see less of the very grand gatherings happening," she said.

El Jardin manager Spenser Cantor said the competition between restaurants has changed, and that the standards people expect and pay for are the highest they have ever been.

He said it's common for his customers to tell him that going out to eat at a restaurant was a rare event for them.

"People aren't going out as much as they used to so they need every experience to be consistently fantastic."

Edmonton AM5:13The plunging profitablity of restaurants

The profitability of restaurants in Canada has plunged, according to an industry group. Restaurants Canada says over half of of its members operate at a loss, compared to 12 per cent pre-pandemic. That doesn't come as a surprise to local restauranteurs. Mike Rebalkin, along with two partners, own five restaurants in Old Strathcona: Meat, The Next Act, Marlo, Pip and Pals.