At the end of every year, my inbox fills with predictions for food and dining trends. If they are to be believed this year: tamarind, shiso cocktails, and pizza vending machines. I suspect the real dining trend of 2024 will be more nuanced. It’s restaurants and diners all trying to feel comfortable spending money that economic forecasters tell us we won’t be spending.
To thrive, restaurants must create the illusion of royalty for two hours. This fantasy requires people who cook and bring us food, anticipate our desires, and wipe away our crumbs. It also requires an absence of financial anxiety. The audience is just as important as the magician. In 2024, restaurateurs and diners will need to look deep into one another’s eyes to keep that magic alive — and ignore what their bank accounts are telling them.
After three years of chaos, 2023 was a bumpy ride for restaurants. While staffing remains the number one challenge for most, declining consumer spending and impending debt repayment are certainly contenders.
Of the $49.2 billion loaned through the Canadian Emergency Business Account, 40 per cent was in Ontario. On January 18, those CEBA loans come due. Businesses that repay the interest-free loans in full (of as much as $60,000) will still eligible for forgiveness up to $20,000. After the deadline, they will be charged 5 per cent interest. The original deadline was December 31, but 18 extra days isn’t very helpful — it’s a far cry from the year-long extension that all 13 Canadian premiers requested.
There’s never a good time for debt to come due. But this is definitely not a good time. In 2022, diners returned to restaurants that had been able to operate at full capacity for the first time in two years. It was a spirited reunion. But in 2023, with inflation, federal interest rates, and housing costs all climbing, Canadians cut back on the first thing many of us cut back on when times are tough.
Back in September, the reservation platform OpenTable released some alarming numbers. In Toronto, “seated diners,” meaning reservations for full service, were down 10 per cent year over year, following three months of consecutive decline. A spokesperson told me that, in October, visits were flat, with no growth or loss.
I have heard from some restaurateurs who had a good year. But more of them had seen average diner spending go down. They were seeing regulars come in but not order appetizers or cocktails or dessert.
According to sales data from Restaurants Canada, while the volume of diners tapered off, spending decreased as well.
From 2019 to 2023, menu prices rose an average of 18.5 per cent. But over that same period, the average cheque size for full-service restaurants increased by only 12.7 per cent. Only in quick-service restaurants (fast food, food halls) did the average cheque size (which rose 19.2 per cent) exceed menu inflation.
That means that this year, every restaurant is competing for smaller pieces of a smaller pie.
Yes, two years of rate hikes from the Bank of Canada have cooled inflation. But it will be some time before most Canadians feel any relief on variable-rate mortgages. And no one is predicting a return to 2020 interest rates. So restaurateurs can likely expect another four quarters during which diners reduce their spending. Restaurants will have to find creative ways to grow revenue. Everyone needs to be aiming for best-in-class. And no idea should be ruled out, from dynamic pricing to operating as a daycare during off-hours.
Okay, maybe not that last one.
But dynamic pricing (which sees menu prices fluctuate based on periods of demand and is standard in the airline and hotel industry but rare in dining) now doesn’t seem so unthinkable.
There’s the threat of insolvency: Restaurants Canada says that half of restaurants are still operating at a loss. And adequate staffing remains an unsolved mystery for too many.
Some of the impact of this is visible to customers.Diners can see restaurants reducing hours (didn’t this place used to be open for lunch on Tuesdays?) and service (a waterglass unfilled, a bill that takes “too long” to arrive). But what they can’t see beneath the waterline is the iceberg of burnout. Owners, chefs, and managers post a job, receive 10 resumés, schedule three interviews, and have two people show up — then the one they hire ghosts after a first shift. Shorthanded owners and managers are the ones who have to hop on the line or behind the bar. And they are exhausted. But the industry at large has only itself to blame.Labour has been a problem for almost 10 years. And it’s reached a crisis level because restaurateurs have insisted that a 19th-century management style (yelling has gone out of fashion, but 14-hour shifts have not) is still viable.
We diners sometimes think of restaurants almost as if they’re a utility. We can not only go out and have other people cook and serve us food, but also, depending on where we live, find any kind of food and service we want: hand-made tortillas, dumplings and noodles, Japanese tasting menus, Korean barbecue, takeout or dine-in, fancy or counter service, and so on. It’s a lot more choice than when we go to the grocery store, where three national corporations dominate the market. If we diners don’t support independent restaurants with our patronage, if government doesn’t support small business, if restaurant owners don’t embrace change by modernizing, restaurants might end up reflecting the consolidation of every other industry.