Restaurant Industry Alert: 2024 Brings Economic Challenges, Says Morningstar

DBRS Morningstar’s 2024 Restaurant Outlook predicts a challenging year for Canada’s restaurant sector. The global credit rating agency highlights the impact of economic pressures, including aggressive interest rate hikes and the repayment of pandemic loans, on the industry.

While there is cautious optimism for late 2024, the sector faces immediate hurdles with a significant number of restaurants operating at a loss or barely breaking even.

Here are some of the findings from the report:

• Economic Strain: Morningstar reports that aggressive interest rate increases are beginning to impact consumers and the economy, affecting restaurant revenues.
• Delayed Recovery: The agency anticipates potential improvement in late 2024, contingent on disinflation and shifts in consumer behavior.
• Persistent Pressures: Restaurants continue to feel the weight of past challenges, with 53% operating at a loss or barely breaking even, compared to just 10% pre-pandemic.
• Bankruptcy Surge: The industry saw an almost 40% increase in bankruptcies year-over-year for the 12 months ending November 30, 2023.
• CEBA Loan Repayment: The deadline for Canada Emergency Business Account (CEBA) loan repayment poses an additional threat, with many small businesses facing a 50% increase in pandemic debt due to repayment difficulties. More than 885,000 small businesses and not-for-profits took out CEBA loans, totalling more than $48 billion.

The report has generated some concerned and urgent reactions:

• CFIB Concerns: The Canadian Federation of Independent Business expresses disappointment in the government’s response to extending the CEBA loan repayment deadline, fearing a rise in business failures and loan defaults. In a press release, the CFIB says that it is “very disappointed the federal government has ignored the please of tens of thousands of small business owners to give them more time to repay” their loans.
• Closure Risks: Dan Kelly of CFIB warns that one in five Canadian restaurants risks closure due to these compounded challenges.
• Cautious Optimism: Despite immediate hardships, DBRS Morningstar holds a cautiously optimistic view for revenue growth in 2024, based on expected continued but moderating growth in menu prices and the full-year effects of last year’s increases.

This outlook presents a sobering picture of the immediate future for Canada’s restaurant industry, highlighting the need for strategic planning and support to navigate the ongoing economic turbulence.

READ MORE
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What to do if you lose your job

Losing a job in the restaurant industry, especially during challenging economic times, can be stressful and disorienting. However, there are practical steps you can take to navigate this difficult period and position yourself for future opportunities.

• Assess your financial situation
• Update your resume and online profiles
• Network actively and attend industry meet-ups
• Consider upskiling or reskilling
• Explore diverse employment opportunities

Navigating Severance Pay in the Restaurant Industry

Understanding your rights and options regarding severance pay can significantly influence your financial stability after job loss.

In Canada, non-unionized employees working in the restaurant industry have a right to full severance pay when they are fired or laid off from their job. This applies to people working in full-time, part-time, and hourly positions.

How to properly calculate severance pay

When determining how much compensation a non-unionized worker is entitled to, a variety of factors must be considered, including age, length of service, position at the company, bonuses, benefits, and the ability to find new work.

LEARN MORE
• Severance Pay in Ontario
• Alberta severance packages
• Understanding severance in B.C.

Don’t sign on the dotted line!

Do not accept any severance offer, termination papers, or exit agreement that your employer may provide you with.

Once you sign back these documents, you eliminate your ability to negotiate your severance package.

Generally speaking, if an employee does not receive the proper amount of severance pay when they lose their job, they have been wrongfully dismissed. An employment lawyer at Samfiru Tumarkin LLP can analyze your situation and explain how much compensation you may be owed.

Talk to an employment lawyer

The knowledgeable team of employment lawyers at Samfiru Tumarkin LLP has helped tens of thousands of non-unionized individuals across the country.

In addition to severance package negotiations, our lawyers have experience securing solutions for the following legal matters:

If you are a non-unionized employee in Ontario, Alberta, or B.C. who needs help with an employment issue, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.