Restaurant sector facing 'make-or-break' holiday season, say industry groups

This holiday season could be a "make-or-break" moment for some restaurants with the sector still struggling to return to pre-pandemic levels, according to industry groups. 

B.C.'s hospitality industry is banking on a lucrative December with pandemic loan repayments due in January. But there are fears consumers will curtail holiday spending given the uncertain economic climate. 

"Our margins are razor thin to non-existent," said Matthew Senecal-Junkeer, owner of two restaurants in downtown Vancouver. 

"There's something really seismic happening in our sector and just hasn't been able to get out of that hole since the pandemic." 

In April, he was one of many business owners voicing concerns about a "post-pandemic hangover" that was forcing many restaurants to file for bankruptcy. 

According to Restaurants Canada, spending on food services remains nine per cent below 2019 levels. Nationally, 51 per cent of companies are still either losing money or barely breaking even. One-quarter are worried they will not survive unless conditions approve. 

Senecal-Junkeer said both his restaurants started as daytime cafés that serve brunch and lunch, but post-pandemic office crowds never returned. Now, one of them features a wine bar in the evenings; the other morphs into either a taco stand or pizza joint at 5 p.m., depending on the night, so that the space never sits empty.

"Frankly, those side hustles are what's keeping us afloat," he said, adding that December is usually 30 to 40 per cent busier than the other winter months. 

"It's bookings, it's buy-outs, it's people reconnecting with family and friends — it's usually the busiest time of the year for us."

Senecal-Junkeer said this holiday season is shaping up better than last year's in terms of bookings for office parties and other private events, but still not where it was before the pandemic. 

'The absolute most lucrative time of the year'

The holiday season can make up 20 per cent of an establishment's overall revenue for the entire year, according to B.C.'s Alliance of Beverage Licensees.

"The holiday season is the absolute most lucrative time for our businesses, and I think it's going to be a make-or-break season for a lot of hospitality businesses out there," said executive director Jeff Guignard. 

He noted the profits generated in December are often what carry many through the slowest months. 

"We need to get money in our bank accounts now to keep our employees busy in January and February and March," Guignard said.

"So if you have a favourite neighbourhood pub or bar or restaurant in your community, we need your support now more than ever." 

Government-backed pandemic loans remain the biggest deal-breaker for many businesses. 

The federal government granted a small extension to the deadline, moving it from December of this year to Jan. 18, 2024.

Guignard says eight in 10 establishments have said they won't be able to repay those loans by deadline, and is urging Ottawa to offer a longer runway and more flexibility to pay back the money. 

"They've said we can go to a bank and refinance, but more debt is not the solution here, and interest rates are also very high right now, so that's not going to help," he said. 

As for Senecal-Junkeer, he says he took out two loans totalling $120,000. He's not sure what's going to happen come the new year. 

"We're kind of waiting to see what December is like," he said. "Frankly, it's going to be a stretch for us. We're hoping to hear back on what bank financing will look like, but there's no real clear path forward." 

According to the Conference Board of Canada's latest outlook, output across Vancouver's food services sector is expected to grow an average of 3.5 per cent each of the next three years.