Local Restaurants Feeling the Pinch as Less People Are Eating Out
According to a recent Statistics Canada Report, Saskatchewan is facing a decline in food and beverage sales. To put it more precisely, less people are going out to eat and drink in restaurants than what the restaurants have typically been used to.
The report on wholesale trade for November 2017 says Saskatchewan’s sales in food and beverage dropped by 1.5 percent.
MJ Independent spoke with a couple local restaurant owners to find out if those statistics are true or Moose Jaw and whether or not they are "feeling the pinch".
Kelly Burns, a franchisee at Brown's Social House, says it's true, but it looks like the numbers are already rebounding positively. "We have seen sales in 2017 drop at a pace bigger than we would like. In 2018 we are actually up on 2017 and trending in that direction."
"What we have noticed is less guests" Burns added, "but when they go out they are willing to treat themselves and are spending more on themselves. We believe it’s become more of a special occasion to dine out, so people are willing to spend more and have a little better meal."
Ashlea Street, the Owner and Operator at Rock Creek, isn't so optimistic. "Yes, our numbers are way down and I cannot see how we, as local owners, will be able to recover" she said.
She also said that when the economy struggles, so does her restaurant. "our costs are higher to give quality, meaning we have fresh prepped food everyday and not pre packaged and we try to keep the prices affordable because of taxes, so we have a tough time making sales when the economy is down."
Kelly at Brown's also cited the "uncertainty of the economy" as a factor in the sales decline. "Obviously downtown Moose Jaw doesn’t have as many events in the last couple years, with the US dollar determining how many acts they will book" he said.
Both business owners think that regulations and taxes on dining establishments are making it more difficult to earn a profit. Burns stated that there are far too many taxes involved in eating, "the drinking laws, I’m uncertain how much they actually affected us, as we are a restaurant first, so there may be a slight downside in sales but obviously responsible drivers are well worth that trade off. The PST was an immediate impact, as it doesn’t make a huge difference in the price but leaves a sour taste in people’s mouths, knowing its on there."
Ashlea at Rock Creek said "It doesn’t help on the taxes we pay to the government, especially when our main purchase is food at no tax, but yet we have to charge tax and have nothing to write off."
But there are many other factors included that drive down a restaurant's opportunities to be profitable. Kelly said that just about every other cost is increasing. "Food constantly increases in cost", he said, "TSN and SPORTSNET raised prices by 1500% for restaurants and bars. We have seen minimum wages increase and will obviously continue. Utilities constantly go up, property taxes never drop and with wages increasing it effects everything we buy not just the wages we pay. Our cleaners, suppliers, trades and anyone we have to hire has had costs increased so they have no choice but to pass it on. This includes the PST we pay on their services now costing thousands a year now."
Ashlea at Rock Creek cites the competitiveness of the industry itself, as a hindrance to profit-making. "There is a trend of Corporate Restaurants that are popping up everywhere, thinking it will work in that community, but in actuality it just takes away from the existing restaurants and the Corporate places don’t even make what they hope to or expect to. The public thinks, we need a Keg or we need another restaurant, but yet they don’t look at what they actually have and how communities put the pressure on restaurants to keep people in their cities" she said.
Ashlea also made an interesting point about the nature of the competitiveness, in particular to how it works in Moose Jaw; implying that running a restaurant in Moose Jaw is quite a bit different than it is in other large centres. "I researched a while back and there were 132 Food establishments in Moose Jaw, with a population of 35,000 and Medicine Hat had 55 food establishments at the time with 70,000 population" she said.
As for countering the decline, both business have established plans of action, Brown's Social House is undergoing "constant menu development to find great quality products at a more affordable price" and Rock Creek puts on specials, that help to change the public perception that Rock Creek is an "upper scale" restaurant.
Both businesses are attempting to remain optimistic but they are definitely aware that less people eating out could potentially lead to restaurants closing their doors.
"We have seen restaurants close down in the last 12 months" Kelly at Brown's said, "but we believe that if we concentrate on doing things right and giving great service and products at fair prices we will come out on top. There may be less choices in the next 12 months and the strong will survive and I believe we will be one of the group that comes out on the other side."