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Sasilka Shallangwa, creative director of SK Cookks, at the restaurant in Toronto on July 13.Tijana Martin/The Globe and Mail

As the creative director of SK Cookks, a Nigerian restaurant in northwest Toronto, Sasilka Shallangwa was about to make her big move downtown when the pandemic erupted in early 2020.

The next two years were misery. Not only were her relocation dreams thwarted, she struggled to find any sense of normalcy. “We thought the pandemic would be over in a year,” she said. “We had to close at some point and change our operating hours just to figure out how to stay afloat.”

Now, she’s finally seeing things turn around. The provincial government has lifted most of its remaining pandemic restrictions and Ms. Shallangwa is back in business. The customers are back, too. “People are excited to go out, eat and hang out,” she said.

Statistics Canada recently released data showing that April sales at restaurants and bars rebounded above prepandemic levels for the first time in two years.

“Consumers are clearly keen to get out and have fun after two years of pandemic restrictions,” Toronto-Dominion Bank economists wrote in a recent report.

Food inflation is making restaurants less appetizing

Dining out is back in as restaurants rebound to pre-pandemic levels

It is a blessing for restaurants, but owners and managers are not exactly breathing a sigh of relief. The on-the-ground experience is much more nuanced. Diners are back, but restaurants are now grappling with soaring prices. Inflation is so rampant that the Bank of Canada raised its benchmark rate by a full percentage point this month – the first time it has done so in almost 25 years.

“Everything is ridiculously expensive, and restaurant owners are losing their minds,” Ms. Shallangwa said. “So it is no longer about coming out of COVID. When we go to the grocery stores, the prices of things are just very expensive. We really hope to see it go down just because the profit margins are just not there any more at the rate at which the prices are changing.”

Inflation hit 8.1 per cent in June, the biggest rise since 1983. Grocery prices rose 9.4 per cent last month from a year earlier.

Labour is also a major issue. During the pandemic, a lot of restaurant workers moved on to other jobs, and the industry is currently reporting a staff shortage. Ontario alone has about 20,000 vacancies in the foodservice industry, according to industry lobby group Restaurants Canada.

It is particularly frustrating for restaurants, said James Rilett, a vice-president at Restaurants Canada, because many still aren’t turning a profit.

“In our last operations report, 40 per cent of businesses said they are still operating at a loss, and that’s mainly due to higher costs and the fact that they have a lot of debts they need to pay off because of the pandemic,” he said.

There are reasons to be optimistic. Spending by Toronto-Dominion Bank clients using debit and credit cards climbed 15 per cent in May from the same month a year ago, even after adjusting for inflation, with much of that growth coming from spending on services such as dining. Commercial foodservice sales in Canada are expected to reach $74.6-billion in 2022, according to Restaurants Canada, up 21 per cent over 2021.

“We definitely have an increase in business and hopefully we will see people being able to recover. Every day, things seem to be getting better,” Mr. Rilett said.

But businesses have to raise their own prices to cover their rising costs. Statistics Canada found that restaurant food prices were up 6.6 per cent in April over the same month last year, and prices for alcoholic beverages increased 3.8 per cent in the same period.

Harry Ahn, who runs Seoulicious, a Korean restaurant in downtown Toronto, is torn by it all. “Things are becoming much better now than before,” he said. “This is the first summer that everywhere is beginning to open up to people and we are seeing our customers coming back to dine in.”

Harry Ahn sits in his Toronto restaurant, Seoulicious.Tijana Martin/The Globe and Mail

But Mr. Ahn has also raised the price of some items on his menu by $1 to account for the rising cost of food. His prices now range from $6 for an appetizer to $13 for a bowl of bibimbap, a special Korean rice dish.

“I’m losing money because of how expensive food items are in the market,” he said. “Most of my customers are students and they don’t go grocery shopping to know that the food prices have gone up.”

What he fears most, though, is another lockdown or a return to takeout orders exclusively. “We don’t want to see that happen again,” he said.

But that kind of uncertainty is a part of life now for many restaurants. Ms. Shallangwa said the pandemic taught everyone two lessons: “That nothing is permanent … and your ability to adapt is what keeps you in business.”

Editor’s note: The story has been updated with accurate pricing of Mr. Ahn's menu prices

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