Albertans are still going out to eat and drink despite rising costs

Even with the rising cost of living, Albertans seemingly aren't willing to sacrifice a good time bar and restaurant sales in the province continued to grow for the fourth consecutive month, setting a record high of $1 billion in revenues in September.

According to a new report from ATB Financial using data from Statistics Canada, the food and drinksector's revenues are growing and exceedingprevious years.

Rob Roach, deputy chief economist with ATB Financial,says it's a "good sign" for the industry.

"These numbers are for the sector as a whole, and some restaurants will be doing better than others. We do know they've been facing higher input costs, not just for food but also energy and staff," said Roach.

In September, Alberta saw the biggest year-over-year jump in restaurant sales out of all the other provinces, witha nine per cent increase. Canada as a whole had an increase of over seven per cent for restaurant sales in the same time period, according to the Government of Alberta's economic dashboard.

"Restaurant and bar sales broke the $1-billion mark in September. So that's a good news story for a sector that has bounced back really strongly from the pandemic," Roach said.

'Full recovery'

Bars and restaurants were among some of the businesses hit the hardest during the COVID-19 pandemic.

Alberta's restaurant industry saw a steep drop-off in sales, generating only $360 million in revenue at its lowest point in April 2020, according to data from the Alberta government.

Roach says that in Alberta and across the country restaurant and bar revenue has grown past pre-pandemic levels, even when adjusted for inflation.

"Restaurant and bar sales are higher today than they were pre-pandemic, so it is a full recovery," he said.

While the economist noted this report is a large-scale snapshot of the industry as a whole, not all restaurants have had record-breaking sales growth.

Plus, the majority of this revenue comes from limited-service venues a sub-categorythat includes smaller operations such as coffee shops and takeout restaurants whilefull-service restaurants are second highest.

Some say they're not experiencing the record-breaking growth that ATB's report indicates.

"I mean, if they're [talking about] exceeding pandemic levels, absolutely. But they're definitely not exceeding pre-pandemic levels," said Nick Suche, managing director of Syndicate Hospitality Group.

"It's a tough time to be a restaurant or a restaurant owner," he said.

For Syndicate Hospitality Group which oversees Calgary restaurants and bars such as Orchard, Fortuna's Row and Shelter Cocktail Bar business has been less consistent than it was pre-pandemic as people grapple with economic uncertainty.

"I think everyone knows the trope of how thin restaurant margins are," said Suche.

"One of the things that's key for guests [who are] dining out to know is how hard these businesses are working to preserve the guest experience in the face of a lot of challenges."

Suche also believes that businesses are being heavily impacted by the residual effects of the pandemic, with mounting pressure as the Canadian Emergency Business Account (CEBA) loan deadline looms.

Brien Willumsen, who manages Buchanan's, an Eau Claire steakhouse known for its whisky selection,shared similar thoughts.

When asked about the record-breaking sales for the restaurant industry, he said"it kind of depends on what your starting point is."

"If it's, you know, at the low of COVID, it's obviously [made a] comeback. If you go back to, say, 2008, it hasn't come back to those levels yet," said Willumsen.

He said Buchanan's is experiencing higher sales, but a large chunk of its revenue depends on the city's downtown being busy, with more business lunches and large corporate events.

"So as more and more people kind of move away from working at home, it's good for us," he said.

Inflation nation

Bar and restaurant revenue rose by 0.9 per cent, reaching $1 billion in revenues for the month of September.

Roach said half of this revenue is from more people spending more money on going out to eat and drink, whilethe other half can be attributed to inflation,according to the report.

"So some [restaurants] will be passing [costs] on to customers through higher menu prices, others will be trying to stay competitive and keep prices as contained as they can," said the ATB economist.

Willumsen says one of the real challenges for restaurants has been determining menu prices as they navigate food costs amid inflation.

"We have some very high-end whiskeys, we sell some big, big cuts of meat that are quite expensive, but we also sell a lot of more economical [items] for people," said Willumsen.

"You might have something that you're charging more than you normally would like to so that you can keep other things at a level that people can accept the real [tricky part] is getting the balance."

But a restaurant's recipe for success depends on more than one ingredient. As the holiday season approaches, these seasonal sales are crucial for business, and restaurant owners are cautiously hopeful.

Suche believes the industry's challenges break down to maintaining "top-notch" guest experiences at restaurants while the sector juggles various challenges.

"I do anticipate, myself, more pessimistic than optimistic outcomes," Suche said about the holiday season.

"I think there's a lot of fear and people feeling insecure financially that will affect businesses that are considered perhaps a luxury and not a requirement."