Is the cost of living crisis endangering Ontario’s best restaurants?

As patios start to open, hospitality locations in the province are gearing up for their busy season. However, as Ontarians endure an ongoing cost of living crisis, how do restaurants plan to maintain the earnings standard that comes with the summer?

For Daniel Hadida, proprietor and chef at Restaurant Pearl Morissette (a celebrated culinary institution in the Niagara Region town of Lincoln), monitoring the wavering spending habits of the public has always been a crucial part of the gig. 

Hadida is no stranger to the unpredictable nature of the hospitality industry, as he has the scars from the 2008 economic crisis and the COVID-19 pandemic to remind him to keep above water during uncertain times.

“You have to watch yourself and not become too emotionally affected by it. The only tools the restaurant industry has are advertising and word of mouth — that’s about it. You have to use those tools to maximize the opportunities for ‘when’ people go out,” says Hadida. 

According to Restaurants Canada, 62 per cent of Canadian restaurants have reported massive losses and are barely breaking even due to pandemic aftershocks and rising inflation. This, coupled with Ontario’s cost of living increase, has not made for a promising combination, as data from a report drafted by the Economic Research Institute sets Ontario’s cost of living at four per cent higher than the national average.

Hadida compares the riskiness of restaurant operations during this kind of instability to that of operating a farm, as output is required, quotas have to be met and the work still has to be done, even if the farm floods. However, beyond the needs of the proprietor, there are the needs of the staff, who, unlike other industries, often rely on patron generosity for their earnings. 

As the ability to spend for the average Ontarian has been impeded, so have notions around tipping culture. Luckily, Hadida’s team remains unaffected, as Restaurant Pearl Morisette has a no-gratuity policy. This means that staff are salaried and don’t have to rely on tips for a major slice of their income. However, most restaurants don’t provide such an option — a reality that Hadida is keenly aware of. 

“It is an element of this industry, and I think it will always be the case, It’s never been easy,” says Hadida. 

Even with his team secure in earnings, the greater mechanism of Restaurant Pearl Morrisette is still subject to the tides of the Canadian economy, something that, according to Hadida, can only be safeguarded with proper community engagement. 

“The road is hard and you have to take a bit of a holistic approach to be successful unless you have unlimited access to finances or resources. Instead, you ought to rely on a community experience as much as possible, because that helps show your efforts,” says Hadida. 

As for business operations during potentially low customer traffic, Hadida and his team use the opportunity to fortify quality standards to ensure that word still gets out. Yet, according to Hadida, fortification isn’t a silver bullet, and emergency capital is a must for restaurants looking to survive the ongoing ebbs and flows of costs and inflation. 

“You have to have cash flow around, so if you hit some sh*tty times, you have something rest back on… because you are going to go through some dips,” says Hadida. 

As for how restaurants in Ontario can apply the tools that give Restaurant Pearl Morissette the makeshift body armor for economic slumps, time is the only true teacher.

“You have to go through a couple of rounds of getting kicked in the teeth to learn how much safety you need to give yourself — and I’m still trying to figure that out as best as I can,” he says.