Restaurants — ready, set, reset
Pandemic has forced industry to the ‘Big Think’
Some chefs used pandemic time for the Big Think. These are chefs who believe the restaurant industry is broken. They ask: “How can we ensure we don’t end up here again?”
“Here” translates to barely surviving (perhaps failing) because of slim profit margins.
‘Some chefs’ translates to chef-entrepreneur / small businesses ranging from fast food to fine dining. They seem to be the worst impacted on the continuum that includes large chains and chef-centric restaurants that are built around, but not owned by, the chef. Chef-entrepreneurs have “skin in the game,” possibly partnering with an investor. Their distinction is that cooking is their passion, their life, their identity.
‘Broken’ translates to businesses plagued by sustainability issues, even in the best of times. An April survey by Restaurants Canada reported six out of 10 restaurants saying they are operating at a loss, with 50 per cent not expecting to survive this summer.
Razor-thin profit margins are part of what’s broken. The difference between food costs and menu prices hints at wide profit margins. Yet, infographics have been appearing on social media outlining how overhead and labour can reduce the net profit on an $18 pizza to $1.35. The list of overhead costs can astonish new owners as well as diners, and is far more than rent and utilities.
Double digit profit margins from decades ago have — especially since the 2008 financial crisis — been whittled down (more by rent and food costs than by labour) to single digits, with full service at the lower end. Restaurants Canada reports that in Ontario net profits averaged only 3.8 per cent even before the pandemic.
Do we care about any of this? What do restaurants mean to us?
Data from Restaurants Canada confirms that, pre-pandemic, we liked to eat out, with 9.1 million visits to restaurants daily, in Ontario alone. The 480,200 people employed directly in the industry represent 6.4 per cent of Ontario’s workforce and the $37 billion in annual sales is four per cent of Ontario’s GDP. Indirectly related to the industry are another 110,000 Ontario jobs — many small/family businesses and farms.
But, numbers do not tell the whole story. In a TVO: Agenda segment, food writer Corey Mintz pointed out that, “there’s a huge blind spot for the fact that this isn’t just about ‘oh wouldn’t it be nice to still have restaurants’ as much as this is a load-bearing pillar of our communities.” Restaurants can be the heart of a community. They also “have a heart” — donating to local charities — in Ontario, to the sum of $460 million in 2018.
Robert Belcham, Vancouver chef and restaurateur stresses that “food is culture and the independent restaurant scene across Canada is a massive part of the culture of Canada now.”
Urban development trends that have reached Toronto, also make eateries more of an essential. New rental units are sometimes designed with no stove and only a compact fridge. Is the young urbanite habit of restaurant dining/takeout a trend or a created necessity?
If the industry is broken, what’s to be done?
B.C.’s Chefs’ Table Society (CTS) produces the Mise-en-Place podcast. Recently, four talented chefs pondered “The Big Reset” — Robert Belcham, (president of CTS); Adam Hynam Smith, (Australianborn chef/owner of Dispatch in St. Catharines); Todd Perrin (chef/ owner of Mallard Cottage and Waterwest in St. John’s, Newfoundland); and Ottawa-born Amanda Cohen (chef/owner of Dirt Candy, New York City).
The chefs residing in Canada chatted with me afterwards.
The Big Reset is the imperative of moving away from a model where many (owners/staff) work extremely long hours, where few make a secure living wage with benefits, and where many experience serious quality of life issues affecting family life, physical well-being and mental health. Their ideal is an industry where a restaurant has a hope of being sustainable, with a profit margin that enables a cash cushion, building resilience into the system which in turn secures the livelihoods of all, including supply chains and auxiliary services.
Achieving this reset can come, they feel, in part by switching to a no-tipping service model where staff are paid a living wage and restaurant income is less precarious. Common practice in many countries, Hynam-Smith’s positive experience with this in Australia led him to adopt it for Dispatch. It is also accepted practice at Jordan’s Pearl Morissette (rated one of Canada’s top 100 restaurants.) Hynam-Smith concedes that “some chefs/owners don’t see a problem with the industry” and responses to the no-tipping model are mixed. While the totals on a tipping and no-tipping bill may be similar, some diners experience sticker shock and may resent the loss of their power to determine part of the server’s wage. Many feel it will not work unless embraced by all.
Tipping or no tipping, restaurants reopening at reduced capacity guarantees that menu prices will increase.
There are more reopening hurdles. Some staff, anxious about health risks or long-term job security, may not return. Securing the funds for health/safety modifications and the costs of restocking supplies may happen only by adding to debt load.
Restaurants will be pulling out all stops on maximizing profit — smaller menus to reduce food inventory, and creative menus to reduce food waste. Expect takeout/ delivery to continue — be that meals, meal kits, produce/groceries. The reservation process may even require a deposit — non-refundable in case of “no shows” — long a drain on the bottom line.
Eateries have begun to sell ingredients they make from scratch and the sale of branded products will increase, often as part of a meal kit.
The great hope is that people who love dining out will empathize with the new-normal and accept the new cost of dining. Supper clubs and loyalty programs will encourage frequent visits. Then it’s wait and see.
Perrin says, “I will do what I have to do to survive in the short term, but if I can’t do something that I want to do soon, then I’ll do something else (he laughs). It’s not worth it to just lay food in the trunk of peoples’ cars.”
“The truth is we’re not in the food business” adds Perrin “We are in the people business in a world where (aspects of hospitality are) against the (new) rules … It’s a credit to the passion and ingenuity of people in our business that we are able to continue to operate.” Looking ahead, Hynam-Smith says “If this happens again, we’re toast.”
Dispatch Restaurant
dispatchrestaurant.com/
The Chefs’ Table Society of British Columbia
chefstablesociety.com/
Waterwest Kitchen & Meals
waterwesttakeout.com/