The central bank’s successive interest rate cuts are expected to put more money in consumers’ pockets.
Surveys show that most restaurant owners in Metro Vancouver are losing money or barely breaking evenHopes are high that the Bank of Canada’s recent interest rate cuts will stimulate consumer spending.
This is crucial given the many challenges the sector faces.
For example, new federal changes to the Temporary Foreign Workers Program are impacting the industry.
That program’s low-wage stream means employers in the hospitality industry pay their workers about $20 an hour. The federal government is cutting off that flow to the hospitality sector, forcing restaurant owners who want to hire foreign workers to do so under a more expensive high-wage stream that could force them to pay up to $36 an hour. For most, that wouldn’t be feasible.
Ottawa’s intention in making the changes is to have fewer temporary foreign workers and more jobs for Canadians.
Restaurant owners hope the interest rate cuts will make consumers feel wealthier and more willing to spend money so they can have higher sales so they can pay employees.
Canadian central bank The key interest rate was lowered to 3.75 percent on October 23. In May that percentage was five percent.
Four consecutive interest rate cuts have prompted the country’s largest banks to simultaneously cut prime mortgage rates to 5.95 percent.
“It will take a while for the cuts to ripple through the economy, but let’s face it, any rate cut will put a few extra dollars in consumers’ pockets for that extra coffee or glass of wine,” said Romer’s owner Kelly Gordon.
Business is mixed at the pub-style hamburger chain Gordon’s.
He closed its 14-year-old original Romer’s restaurant at 1873 West Fourth Avenue on October 27 because the number of guests was declining and extending his lease would result in an unsustainable rent increase, he said.
To compensate, he opened a new restaurant in Lynn Valley this spring and plans to open a fourth Romer’s restaurant in the U.S. departure terminal at Vancouver International Airport (YVR) in the first quarter of 2025, he said. BIV.
Choosing his spots carefully is crucial, given the difficult times for many restaurateurs.
He chose to open in Lynn Valley because he thought the market was “underserved,” while opening at YVR makes sense because travelers are a “captive audience.”
His other Romer’s restaurants are in Port Moody and the River District, in the southeast corner of Vancouver.
He separately owns the Steamship Grill in Victoria.
“We tend to be more focused on the suburbs, where real estate is a little more affordable,” he says.
Business has been tough in part because diners have been trained to expect happy hour promotions, and they’re drinking less, he said.
“Late-night drinking, and I think drinking in general, is definitely on the decline,” he said.
Data from British Columbia Liquor Distribution Branch (BCLDB) for wholesale restaurant and retail sales supports this estimate.
In the quarter ending in June, wholesale buyers spent nearly $891.4 million on alcohol from the province’s monopoly distributor, or 7.31 percent less than the $961.7 million spent in the same quarter of 2023.
That decline in wholesale alcohol purchases was more than twice as large as the 3.56 percent annual decline in the first quarteraccording to the BCLDB.
Others in the hospitality industry are consolidating their restaurant operations.
Andrew Jameson said BIV he closed his Say Mercy! restaurant at 4298 Fraser Street on Nov. 2 because he “got an offer.”
He sold the lease on that space and the kitchen equipment to a new owner who will launch a new concept, he said.
Jameson plans to focus on his two other eateries: Mackenzie Room at 415 Powell Street and Collective Goods at 3532 Commercial Street.
The Bank of Canada’s rate cuts are “a step in the direction that will hopefully lead to consumers having a little more free cash flow to enjoy things like eating out and having some extra money for things that are considered luxury experiences considered,” he said. .
“It will take another five to six months before people really feel the effects.”
Mark von Schellwitz, vice-president of Restaurants Canada in Western Canada, agreed that it will be a while before many affected homeowners feel the impact of the lower interest rates.
For Von Schellwitz, the central bank’s monetary policy measures are only part of the picture. His organization also wants governments to help the sector.
The most important step would be for the provincial and federal governments to reduce payroll taxes.
He would also like to see the BC government urge the independent WorkSafe BC agency to return some or all of the $2.1 billion in surplus funds. The BC government appoints WorkSafe BC’s board and can therefore exert pressure, Von Schellwitz said.
He also wants the province to create a new tourism and hospitality stream in its Provincial Nominee Program (PNP).
The The BC government changed policy in 2022 to explicitly say that non-hospitality workers, such as health care and child care workers, would be prioritized.
“We want a separate, new stream that guarantees the tourism and hospitality sector a certain number of those PNP spots,” Von Schellwitz said.
The BC NDP, which just won a narrow majority government and today’s confirmed judicial recounts, was criticized in the election campaign for allowing BC’s health care system to spiral to the point where hospitals across the province regularly had to close emergency rooms.
That may make it less likely that the government will reverse its policy and increase the priority given to hospitality workers in the PNP over healthcare workers.
(email protected)
@GlenKorstrom
Leave a Reply