The Canadian restaurant industry is a vital contributor to community prosperity [1]. In recent years, this industry has faced a storm of challenges, from pandemic-related closures and inflationary pressures to labour shortages. Yet, it has shown remarkable resilience, adapting to changing consumer behaviours and embracing new technologies. This report delves into the key trends that shaped the restaurant business in 2024 and offers insights into what lies ahead in 2025.
2024: A Year of Recovery and Resilience
Despite a challenging economic landscape, the Canadian restaurant industry demonstrated signs of recovery in 2024. While many restaurants operated at a loss or barely broke even in the first half of year [1], the industry as a whole experienced growth. In fact, sales were likely to hit $120 billion, an increase of nearly 5% over 2023 [2]. This overall growth was driven by a combination of factors, including increased menu prices and a gradual return of consumer confidence.
Key Highlights of 2024:
- Optimism: Despite the challenges, 81% of Canadian restaurateurs believed they would still be open in 12 months [3]. DBRS Morningstar, a global credit rating agency, also held 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 [4].
- Sales Resilience: Restaurant sales demonstrated resilience, with significant growth observed between March 2022 and March 2023. Sales in March 2022 were $6.8 billion, rising to $7.7 billion in March 2023 [3]. This trend suggests a continued recovery in consumer spending on dining out.
- Chain Restaurant Growth: The top 200 Canadian chain restaurants experienced significant sales growth and expansion in 2023, with sales climbing to $44 billion and locations expanding by 2.8% [5]. This growth was projected to continue in 2024, with chain sales forecasted to reach $47 billion [5].
- Expansion Plans: Despite the challenges, 38% of restaurant operators in Canada reported that they were “very likely to expand their business in the next 12 months” [3]. This indicates a belief in the long-term viability and growth potential of the industry.
- Cloud Kitchen Surge: The rise of cloud kitchens, driven by increased online food delivery and evolving consumer preferences, continued to reshape the industry [6]. This trend allows restaurants to optimize their operations for delivery services, but it also presents challenges to traditional dine-in establishments.
While 2024 was a year of recovery and adaptation, 2025 presents new opportunities and challenges for the Canadian restaurant industry.
Challenges and Opportunities in 2025
Looking ahead to 2025, the Canadian restaurant industry is poised for continued growth, albeit with some persistent challenges.
Growth Projections:
- Overall Industry Growth: Experts predict that the overall food service performance in Canada will exceed that of 2024, with national and regional restaurant chains leading the growth [7].
- Consumer Spending: Consumer spending on prepared food and non-alcoholic beverages is projected to reach $921.7 billion in 2025, up from $895.1 billion in 2024 [8].
- Quick Service Restaurants (QSR): A significant portion of consumer spending – $323.7 billion – is projected to be in the QSR segment in 2025 [8].
Key Trends to Watch:
- Easing Inflation: Inflation is expected to level out in 2025, providing some relief to both restaurants and consumers [8]. This could lead to increased consumer spending and improved profitability for restaurants.
- Technological Advancements: The adoption of artificial intelligence (AI) and automation is expected to accelerate in 2025 [9]. These technologies can help restaurants optimize operations, personalize customer experiences, and improve efficiency [9]. Restaurants need to fundamentally rethink how they operate and connect with customers in light of these technological advancements and changing consumer expectations [9].
- Hyper-Personalization: Restaurants will increasingly focus on providing hyper-personalized experiences to customers, leveraging data and technology to tailor menus, offers, and service [9].
- Sustainability: Sustainability will become a more prominent focus in 2025, with restaurants adopting eco-friendly practices and sourcing ingredients responsibly [9].
- Labour Shortages: The industry will continue to grapple with labour shortages, requiring innovative solutions to attract and retain talent [10]. This labour shortage could have a significant financial impact on the industry. In the food and beverage processing industry, a single unfilled position can cost businesses up to $190 per day in lost net revenue [10]. With over 8,200 businesses across Canada and a projected need for 142,000 new workers by 2030 [11], potential losses from job vacancies could soar to a staggering $268.6 million in net revenue per day or $98.1 billion annually.
Accounting Challenges and Best Practices for Food and Beverage Businesses
Navigating the complexities of the restaurant industry requires a solid understanding of accounting principles and best practices. Food and beverage businesses face unique challenges, including:
Challenge | Best Practice |
---|---|
Inventory Management | Perishable inventory requires careful tracking and management to minimize waste and spoilage. Implement robust inventory tracking systems to minimize waste, optimize ordering, and control costs[12]. |
Cost Control | Fluctuating food costs, labour expenses, and operating costs require diligent monitoring and control. Analyze your expenses, identify areas for improvement, and develop strategies to maximize profitability[14]. |
Regulatory Compliance | Staying abreast of changing tax laws and regulations is crucial for maintaining compliance and avoiding penalties. 45% of companies struggle with labelling and packaging regulations[15]. |
Cash Flow Management | Managing cash flow effectively is essential for ensuring the financial stability of the business[12]. |
Essential Financial Reports for Restaurants
To effectively manage their finances, restaurants need to be familiar with several key financial statements and reports:
- Daily Sales Report: This report tracks daily sales figures, providing insights into revenue trends and potential areas for improvement.
- Income Statement: This statement summarizes a restaurant’s revenues and expenses over a specific period, showing the net profit or loss.
- Balance Sheet: This statement provides a snapshot of a restaurant’s assets, liabilities, and equity at a specific point in time.
- Restaurant Inventory Report: This report tracks the quantity and value of inventory on hand, helping to manage stock levels and minimize waste.
- Chart of Accounts and Accounting Ledgers: These tools help categorize and track income and expenses effectively.
- Cash Flow Statement: This statement shows how cash moves in and out of the business, providing insights into cash flow patterns and potential issues.
- Tip Log: This log tracks tips earned by employees, ensuring accurate reporting and compliance with tax regulations[13].
Accounting Methods
There are two primary accounting methods used in the restaurant industry:
- Accrual Accounting: This method records revenues and expenses when they are earned or incurred, providing a more accurate picture of financial health [17].
- Cash Accounting: This method records transactions only when cash is exchanged, which can be simpler but may not reflect the overall financial picture [17].
Generally, accrual accounting is recommended for restaurants as it provides a more accurate representation of financial health.
How Accountific Can Help
Accountific offers specialized accounting services tailored to the unique needs of food and beverage businesses in Canada. We can help you:
- Optimize Inventory Management: We will help you implement effective inventory tracking systems to minimize waste and control costs. This includes providing guidance on choosing and implementing inventory management software, setting up proper inventory tracking procedures, and analyzing inventory data to identify areas for improvement.
- Improve Cost Control: We will analyze your expenses, identify areas for improvement, and develop strategies to maximize profitability. This includes conducting cost variance analyses, reviewing vendor contracts, and implementing cost-saving measures.
- Ensure Regulatory Compliance: We will stay up-to-date with the latest tax laws and regulations, ensuring accurate and timely filing of all necessary documents. This includes handling payroll taxes, sales taxes, and income taxes, as well as ensuring compliance with labelling and packaging regulations.
- Manage Cash Flow Effectively: We will develop strategies to optimize cash flow, ensuring you have the funds to meet your operational needs and invest in growth. This includes forecasting cash flow, managing accounts receivable and payable, and securing financing.
- Gain Valuable Financial Insights: We will generate comprehensive financial reports that provide a clear understanding of your business’s performance. This includes creating customized reports tailored to your specific needs, providing detailed analysis of financial data, and offering insights into key performance indicators.
- Make Informed Business Decisions: We will provide expert advice and support to help you make informed decisions about your business’s future. This includes advising on expansion plans, menu pricing strategies, and technology investments.
Conclusion
The Canadian restaurant industry is dynamic and ever-evolving. By staying informed about the latest trends, adopting best practices, and leveraging the expertise of accounting professionals, food and beverage business owners can navigate the challenges and capitalize on the opportunities that lie ahead.
As we have seen, 2024 was a year of recovery and resilience for the Canadian restaurant industry. While challenges remain, the outlook for 2025 is positive, with continued growth expected. However, to thrive in this competitive environment, restaurants need to adapt to changing consumer preferences, embrace new technologies, and manage their finances effectively.
Accountific is your trusted partner in navigating the financial complexities of the restaurant industry. We offer specialized accounting services tailored to the unique needs of food and beverage businesses in Canada. Our team of experienced professionals can help you optimize inventory management, improve cost control, ensure regulatory compliance, manage cash flow effectively, gain valuable financial insights, and make informed business decisions.
What sets Accountific apart is our deep understanding of the restaurant industry and our commitment to providing personalized service. We take the time to understand your specific needs and challenges, and we work closely with you to develop customized solutions that help your business thrive.
Contact us today to schedule a consultation and learn how we can help your restaurant succeed in 2025 and beyond.
Works Cited
- Challenges for the Restaurant Industry Persist into 2024 after Record-Breaking Bankruptcies – Restaurants Canada
- Outlook 2025: Key Hospitality Industry Trends & Insights | HUB International
- 60 Restaurant Industry Statistics and Trends for Canada (2024) – Toast
- Restaurant Industry Alert: 2024 Brings Economic Challenges, Says Morningstar
- Top 200 Canadian Chain Restaurant Report 2024 – Technomic
- Canada Foodservice Industry Report 2024: Industry Trends, – GlobeNewswire
- What Will Thrive in 2025 CA – Technomic
- 2025 Foodservice Economic Forecast: Predictions From Datassential
- Deliverect Canada | Business, Technology, and Customer Experience: 2025 Trends
- Addressing Labour Challenges in Canada’s Food and Beverage Manufacturing Industry – DIRECTPATH CANADIAN IMMIGRATION
- Food and beverage industry is poised for change | Fuller Landau LLP
- Importance Of Food And Beverage Accounting
- Restaurant Accounting for Canadian Businesses | QuickBooks Canada
- Navigating financial uncertainty: Restructuring solutions for food and beverage processors
- Accounting & Advisory – Food & Beverage – BDO Canada
- Challenges Surge in Canada’s Food and Beverage Sector | CareersInFood.com
- Essential Guide to Accounting for the Food and Beverage Industry – QMK Consulting