Restaurant Bankruptcies Soar 112% in January
Restaurant Bankruptcies Soar 112% in January
The number of restaurant bankruptcies in Canada jumped to 121 in January according to the Office of the Superintendent of Bankruptcy. This is the highest number of monthly bankruptcies in more than a decade and represents a 112% increase over January 2023. Prior to the pandemic, the restaurant industry averaged 44 bankruptcies a month.
For all of 2023, there were 719 bankruptcies in the restaurant and accommodation industry, up from 500 in 2022 and 367 in 2021. The recent surge in bankruptcies is due to several factors, including debt accumulated during the pandemic combined with eroding profit margins. In January, 62% of restaurant companies were operating at a loss or just breaking even, a 10-percentage point increase compared to the summer of 2023.
Restaurants accounted for nearly one in six bankruptcies in Canada in January – the highest of any industry.
Bankruptcies are expected to climb even higher in 2024 due to an economic slowdown and high household debt level eroding consumer spending. As a result, real sales are forecast to decline in the first half of 2024 followed by relatively flat sales in the second half of the year. To learn more about the economic outlook, click here.
As the Chief Economist and Vice President of Research for Restaurants Canada, Chris Elliott manages and produces a comprehensive research program that has made Restaurants Canada a leading source of information for and about Canada’s $114-billion foodservice industry. Chris tracks and analyzes key industry and economic indicators and translates them into member reports and publications. He also provides research to support Restaurants Canada’s lobbying efforts on issues that affect foodservice operators – from payroll taxes to food costs.
Chris has worked with Restaurants Canada for over 20 years, has a Bachelor of Arts and Master Degree in Economics and specializes in economic modelling and forecasting.
