Labour costs among top concerns for Canadian restaurants

A new survey finds that rising food and labour costs are among Canadian restaurateurs' chief concerns in the next several months.

According to the Canadian Restaurant and Foodservices Association, increasing food prices and the rising cost of paying their employees serve as the restaurant industry's top issues within the next six months, cited by 77 and 67 per cent of respondents.

Despite these potential adverse impacts on business operations, however, operators don't foresee raising the prices on the food they serve. Canadian Restaurant and Foodservices Association noted that more than half - 53 per cent - of respondents said they expect to keep their menu prices the same in the next six months. In addition, 75 per cent of restaurateurs said they will either maintain or add to their staffing levels in the next half year.

Based on data from Statistics Canada, CRFA notes that food and labour are, in fact, the two largest expenses for restaurants, comprising roughly 70 cents for every dollar's worth of sales.

Another source of anxiety for restaurant owners was a perceived weakness in the country's economy, as 58 per cent of respondents said they were concerned about Canada's economy.

But Canadian restaurateurs' concerns aren't shared by many other Canadian businesses, as a separate survey found that others see taxes and over-regulation as top hindrances to growth, often preventing them from innovating.

According to a recent Conference Board of Canada reports based on results from the World Economic Forum's Global Competitiveness Survey, among the 142 countries surveyed, Canada placed 11th in regards to feeling the need to innovate, trailing Japan, the United States and Germany, as well as smaller economies like Switzerland, Sweden and Finland.

"Canadian business leaders may be less inclined than their global counterparts to adopt innovation as a business strategy because they do not see it as rational or necessary in their current environment," said Daniel Munro, principal research associate for the Conference Board. "Many Canadian business leaders feel that competitive pressures are not strong enough to motivate innovation, capital markets are too weak, and the tax burden is too high. But their perceptions do not always align with reality."

While Canadian business leaders pointed to taxes and regulations as barriers to innovation, ranking Canada 40th among the countries surveyed, Canada's actual total tax rate is 29th in the world, according to the Conference Board of Canada, lower than countries who found more of a need to innovate yet did not see regulations and taxes to be as much of an obstacle, such as the U.S., Switzerland, Japan and Sweden.

Business leaders in Canada were also more likely to describe capital markets as a barrier to innovation. Overall, they ranked 19th when it came to leaders' perceptions regarding venutre capital availability and 22nd on the ease of access to such things as mortgage loans.

Munro stated that in order for Canada's businesses to thrive, companies need to get a handle on what barriers are real and what ones are merely perceived.