The numbers are truly sobering for the hospitality industry.
A new report suggests the industry could lose up to $20 billion in revenues in the next year, of which 30 percent may be due to telecommuting.
And the devastation that will have for business owners is staggering.
“We are likely to see at least one restaurant out of four disappear within the next year if not more,” said Sylvain Charlebois, Professor, Food Distribution and Policy, Faculties of Management and Agriculture, Dalhousie University.
“Industry experts that we consulted with believe that our numbers are actually quite conservative.”
IS TELECOMMUTING OBLITERATING THE HOSPITALITY INDUSTRY?
The Agri-Food Analytics Lab at Dalhousie University, in partnership with Caddle, conducted a comprehensive nationwide survey to assess how many Canadians are thinking of changing their lifestyle to spend more time working from home. A total of 10,851 Canadians were surveyed on telecommuting and food expenses at the end of July.
“Things don’t look great for sure, especially for restaurants located downtown everywhere. The one thing that is coming quite clear is that there are a lot of short-term issues that we need to address — fear, anxiety, the vaccine, jobs. Things like that,” said Charlebois, who is Senior Director of the Lab.
“But the one thing that may actually change forever is telecommuting. Telecommuting is going to get people to work more from home and as soon as you spend more time at home you will consume food differently.”
The survey found that 23.6 percent of Canadians intend to work more often at home in a year from now, although many Canadians either don’t know (18.4 percent) or won’t know what they will do in a year from now (22 percent). Quebec has the highest percentage with 28.9 percent of respondents saying that they want to work more often at home. Ontario is second at 24.8 percent.
The report found that Millennials (1981-1996) have the highest percentage with 25.3 percent. Of the group who said yes, 20.6 percent said they would work from home on a full-time basis. Of the people who intend to work from home, 57 percent plan to spend less at the restaurant because of working from home. The highest rate in the country is Ontario at 59 percent.
For the hospitality industry, Charlebois said he doesn’t think it will get better soon. It’s just a matter of knowing more of what’s going to happen in the fall.
“42 percent of people surveyed have no idea where they’re going to be or what they’re going to be doing a year from now,” he said. “There’s a lot of uncertainty out there. But for people working some of them are actually planning to move. Some people are planning to do different things. There’s a lot going on there which makes the entire situation much less predictable.”
Prior to the pandemic 36.8 percent of respondents were going to a restaurant for a meal/break at least twice a week, explained the report. That number goes down to 23.3 percent when asked about plans after the pandemic is over.
“This is a significant drop of 36.6 percent of people who intend to visit restaurants at least twice a week, during the work week. Numbers show though that more people are willing to visit a restaurant only once a week after the pandemic (76.7 percent after versus 63.2 percent for before),” said the report.
The report said 21.7 percent of respondents stated that their employers are planning to allow people to work from home more often. Of respondents whose employer is considering allowing staff to telecommute, 35.1 percent intend to relocate within a year. Of respondents who stated that their employer plans to allow more people to work from home 52.9 percent intend to do it permanently. Of these respondents 70.1 percent intend to spend much less time and money at restaurants.
A total of 10.7 percent of respondents are looking at relocating since telecommuting is possible. The highest rate is in Quebec, at 14.1 percent. A total of 17.4 percent of Gen Zs are planning to relocate due to the possibility of telecommuting, the highest rate of all generations, added the report.
“The financial impact on the food industry will be significant as more people work from home and potentially outside of urban cores . . . While the future lies in uncertainties, this may represent a loss of up to $20 billion over the entire year for the hospitality industry. As more people stay home to telecommute there is a notable shift seen in the economy. This shift in work locations may be responsible for at least 30 percent of lost sales in food service for this coming year alone. Restaurants located in urban cores across the country will be affected the most,” it said.
But Charlebois said there is opportunity for entrepreneurs to relocate.
“And to think about different models like ghost kitchens for example. The use of food delivery apps is going to be critical as well. Instead of just actually waiting for the money to show up at your doorstep, you’re going to have to go after the money. That’s basically what’s happening right now,” he said.