Spending at Canadian restaurants is on the rise. According to Statistics Canada, the average household spent almost $2,600 on food purchased from restaurants—an increase of more than 17% increase over four years. And Restaurants Canada projected full service and quick service restaurants to report nearly $64 billion in sales last year.
While this is good news for restaurants, they still face a number of challenges: an increase in labour costs, finding and keeping employees, remaining profitable, and complications related to bookkeeping and payroll.
One of the largest expenses for any restaurant is labour. Across Canada, minimum wage costs have soared. In Alberta, for example, the adult minimum wage has jumped more than 50% between 2014 and 2019. And in Ontario, minimum wage has jumped almost 37% over the same period of time.
The strong economy is making it even more difficult to find workers in certain provinces and even some cities. This year, the country’s unemployment rate dropped to its lowest level in more than four decades.
Turnover is also a constant problem for restaurants, especially with a low unemployment rate. While some roles have a low annual turnover rate, it can be as high as 300% for some positions. There are also the hidden costs around finding and replacing employees that must be considered.
Our survey of restaurant owners and operators notes that rising wages and high staff turnover were two of their biggest operational concerns. They’re also worried about their payroll and bookkeeping.
Payroll can be difficult because of the high turnover rates in the industry. A record of employment must be issued shortly after their departure. And because of the frequency of employees leaving, it can become a hassle. The rules and legislation regarding payroll change frequently, and it can be even more challenging if an operator has restaurants in more than one province since the rules vary in each jurisdiction.
Bookkeeping is difficult for owners with a single location because they don’t have a dedicated bookkeeper on staff. Data accuracy is a problem, but another is the timeliness of the data they receive. In a best-case scenario, financial data should be available within a very short timeframe in order for restaurant owners to make informed decisions.
As a result of some of these challenges, nearly half of respondents in our survey say they have already outsourced payroll and bookkeeping to a third party.
In our next post, we’ll discuss the trends affecting the restaurant industry.
To learn more these issues and our survey, download BDO’s Franchise Restaurant Report 2019: Owners’ top concerns and trends affecting the industry.