Nfld. & Labrador

Inflation adding to pressure on N.L. restaurants looking to recover in 2023

Chinched owner Michelle LeBlanc says restaurants are feeling the financial pinch, with the rising cost of goods, fuel and labour cutting into already small profit margins.

Rising food costs cutting into already slim profit margins

A woman with her hair in a ponytail stands in front of a bar. She wears a black t-shirt that reads 'Chinched' and shows a logo of a diagram of a pig split into different sections.
Michelle LeBlanc is the owner of Chinched restaurant in St. John's. (Danny Arsenault/CBC)

It's been a challenging two years for restaurant owners around the globe, and those in Newfoundland and Labrador aren't exempt to inflation, a labour shortage and now what may be a long, slow winter for sales.

Michelle LeBlanc, owner of Chinched in St. John's, says less disposable income floating around after the holidays paired with lower levels of tourism compared to the summer months make the winter challenging to operate in. That's only been amplified the last two years, fuelled by the COVID-19 pandemic and the rising cost of doing business.

"It's certainly been, in the almost 13 years that we've been open, the most difficult few years. And we'll see what comes with the next few months," LeBlanc told CBC News Tuesday. "There's a lot of hurdles coming down the pipe for St. John's restaurants."

LeBlanc said restaurants are feeling the financial pinch, with the rising cost of goods, fuel and labour cutting into already small profit margins.

A woman standing at a bar wipes down a number of glasses.
LeBlanc says the rising cost of doing business is cutting into the already small profit margins of the restaurant industry. (Danny Arsenault/CBC)

According to Richard Alexander, vice president of the Atlantic region for Restaurants Canada, prices for necessities like chicken, beef, dairy and canola oil have all increased by at least 10 per cent over the last year.

In a notable example, the price of lettuce has increased by over 400 per cent in recent months due to a supply shortage.

"The only way for us to recoup any of that is to put our prices up," LeBlanc said.

"We try to keep our menu prices as reasonable as possible, but there's really no other way. Otherwise we'd have to close. Like it's either put them up or lock the doors."

LeBlanc says her largest cost increase has come from pork — which can't be sourced locally in the volume they need it — going up between two and four dollars per kilogram.

Some restaurants will be forced to close, says industry veteran

Although LeBlanc said her restaurant is able to get by through diversifying over the pandemic and maintaining their core staff, Alexander says not all restaurants in St. John's will be in the same boat over the coming year.

"We're expecting over the next couple months [that] we'll start to see some restaurants close," Alexander told CBC News.

A man wearing a black jacket stands in downtown St. John's. A sign on the building behind him reads 'Afghan Restaurant.'
Richard Alexander is vice president of the Atlantic region for Restaurants Canada. He expects some restaurants will have to close their doors this year. (Danny Arsenault/CBC)

"Most restaurants that did survive during COVID, they did so by taking on incredible amounts of personal debt and business debt. And once the restrictions opened up and you see people out enjoying life again in restaurants and on decks and patios, we were hit with incredible inflationary costs."

Paired with rising costs, Alexander called the labour shortage the biggest challenge facing the industry.

"Restaurants are cutting back on hours, they're removing tables. Management is working more. And, you know, they're closed for Mondays and not doing lunches and things like this. And that's how they're coping," he said.

"It's unfortunate that the industry is seeing all these things happen at the same time."

Read more from CBC Newfoundland and Labrador

With files from Heather Gillis