Montreal restaurants say profit margins are dropping again

For nearly ten years, Provisions Bar à Vin has been a mainstay in Outremont, but co-owner Guillaume Noel says business has been up and down.

“It has become harder and harder to find a model that works financially for restaurants,” he says.

The space runs as a butcher shop and cafe by day, and as a wine bar and steakhouse by night.

However, each year Noel says the profit margins are getting smaller.

“We see that people have maybe a little bit less money in their budget to go and spend to go out. And also they drink less. So the sales mix on our side has become more food, which costs more money,” Noel explains.

Provisions Bar à Vin isn’t alone. According to a report by Restaurants Canada, eateries across the country have been struggling to make a profit since 2019.

“Before the pandemic, 12 per cent of restaurants were operating at a loss or breaking even. And now that number is up to 44 per cent,” Restaurants Canada spokesperson Milena Stanoeva tells CTV.

She adds that in some cases profit margins have dropped to as little as three per cent.

While Noel’s restaurant is profitable and it’s one of four that he co-owns, he says roughly 40 per cent of their revenue is spent on food.

About 35 per cent covers labour, which leaves just 25 per cent to cover the rent and pocket whatever is left.

That’s why Stanoeva says some restaurants may have to pivot to stay open in the years to come.

“They might be recalibrating their menus, cutting out some of the less popular dishes or dishes that aren’t as cost effective. They might be looking at where they can get supplies for a lower cost,” she says.

Some might also be cutting certain operating hours - a changing menu for both owners and customers.