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From Plate to Debt: How Inflation is Feeding Restaurant Bankruptcies in Canada

Rising inflation is increasingly pressuring the Canadian restaurant industry, with over half of all restaurants reportedly operating at a loss, according to Restaurants Canada, a national organization representing 30,000 eateries.

This financial strain has resulted in a 116% increase in restaurant bankruptcies over the past 12 months, and unless changes are made, this trend is projected to continue.

Mark von Schellwitz, western Canadian vice president of Restaurants Canada, revealed that a whooping 83% of restaurants resorted to Canada Emergency Business Account (CEBA) loans during the pandemic. However, only a fifth of these businesses expect to be able to repay their loans before the end of December 2023. These loans, provided interest-free to small businesses, were a critical support during the pandemic, but the impending deadline now adds additional pressure to the already struggling industry.

Restaurants Canada is calling on the federal government to extend the repayment deadline by 36 months. This extension would allow restaurants to recover further, especially considering ongoing difficulties such as rising food prices and staffing shortages. The organization contends that this plan would ensure that taxpayer funds are returned while simultaneously preventing a wave of imminent bankruptcies.

The federal Department of Finance has responded by indicating their ongoing support for small businesses. They cited previous extensions to the repayment deadline and new measures in the 2023 budget aimed at reducing credit card transaction fees for small businesses in partnership with Visa and Mastercard. This measure is set to reduce interchange fees for over 90% of businesses that accept credit cards, with reductions up to 27%.


Information for this briefing was found via Restaurants Canada and CTV News. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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