Restaurants feeling the pinch as people curb their appetite for eating out: Jasmine Mangalaseril

Last year, consumers made up for lost pandemic time and went back to their favourite restaurants and ordered everything: pre-dinner drinks, starters, mains, desserts and maybe even an extra bottle of wine.

What a difference a year makes.

This year, high inflation, personal debt and economic worries curbed the appetite for restaurants.

"It has really changed just within the last 12 months," said Chris Elliott, chief economist for Restaurants Canada. "When things started to reopen, it was that pent-up demand. They were splurging…and now, one year later, it comes down to affordability."

More than just places to eat

In tough economic times, it's easy for some to downplay restaurants as a frivolous luxury, but they're important to the economy.

According to Restaurants Canada, restaurants are Canada's fourth-largest private employer, employing nearly 1.2 million people. This year, food service revenues are projected to grow to nearly $120 billion.

While restaurants are places to unwind or reconnect while having a meal or snack, for those who don't know how to cook, or are unable to prepare or store meals, they're a necessity.

Changing dining habits

This year, many people are reining in non-essential spending. Most often, that means cutting back on restaurants, whether that's going out to eat or getting takeout or delivery.

With price and value top-of-mind, restaurant goers are spending their dollars differently.

"What people are doing is they're substituting some of those higher menu price occasions for the lower [cost] breakfast occasions," explained Elliott.

Quick service spots are seeing more customers at breakfast than supper. People are not lunching out like they used to. More people are getting dinner from full-service restaurants.

While consumers are spending a bit more, it's not enough to make up for restaurant operating cost increases. More than half of Canadian restaurants are either losing money or barely breaking even. Five years ago, just 12 per cent were in that boat.

Questioning that $17 burger deal

Seeing the shrinking price gap between quick service and some table service restaurants, more people choose dinner at a table service spot over burger meal deals.

My Nguyen, co-owner of downtown Kitchener's takeout sushi restaurant Humble Lotus, noted her guests are choosing inexpensive options.

"A lot of our clients will choose one plant-based and one-fish [option], because you might save three four dollars as an overall combination. You still get the satisfaction of eating something that feels indulgent without breaking the budget," Nguyen explained.

At Waterloo's Proof Kitchen and Lounge, general manager Fletcher Falls said guests are also adjusting their orders. 

"You're not getting as many dessert orders as you would in the past. For appetizers you are seeing more people sharing one, instead of taking one by themselves," said Falls. "It's before and after the main that you're seeing a little bit of difference."

Loyalty programs

Loyalty programs are helping Canadians stretch restaurant dollars. About half of Canadian quick service and less than one-third of full service offer them, with six in 10 Gen Zs enrolled in at least one.

Some are free and others are on a paid subscription model. Rewards range from free food or drinks to discounts, to access to secret menus, to invitations to exclusive events.

Waterloo's bagel café, Poppy's, works with local start-up Niya to administer their Holey Rollers loyalty program. More than 700 people are enrolled in their free and paid tiers.

"It gets our name out," said Poppy's co-owner Michael Fry. "For people who have the subscription, because they're thinking about it all the time, they're telling their friends about it…so it brings out brand awareness."

Global flavours

Fajitas and stir frys have been on mainstream menus for years. Now, regardless of restaurant price point, chefs are adding more global flavours.

Elliott mentioned these broadened options are part of the generational shifts that reflect what Canadians eat, as well as what we see on cooking shows and social media.

At Proof, executive chef Ryan Reid builds international flavours into menus. 

"I think Canada, being such a multicultural country, there's so much to be learned," explained Reid. Whether it's about different cultures or it's about different cuisine, there's so much to be learned just living in this country."

Their current menu includes hummus, cassoulet, and fish and chips, with two of their more popular dishes being lamb bourguignon and butter chicken.