Canada’s Restaurant Ecosystem: What it Needs to Thrive

DISCLAIMER: This content is provided for informational purposes only and is not intended as professional advice. Toast does not warrant the accuracy or completeness of any information, text, links, or other items contained within this content.

 

It hasn’t been an easy few years for restaurants in Canada.

First, the obvious: the industry was rocked by over two years of COVID-19 shutdowns, strict capacity limits, and repeated layoffs. According to The Globe and Mail, Toronto, the country’s largest city, faced some of the longest shutdowns in North America. All told, roughly 13,000 eateries throughout the country couldn’t rebound from the pandemic restrictions and were forced to close permanently.

And just as pandemic restrictions eased, inflation reared its ugly head. By July 2022, the cost of living in Canada had skyrocketed by 8.1% — a 39-year high. As of September 2022, food costs, in particular, outpaced the the already sky-high inflation, rising by 11.4% — the fastest annual increase since 1981. And it’s not over yet — according to Canada’s Food Price Report 2023, food prices are expected to rise by another 5 to 7 percent in 2023.

Restaurants showed their true resiliency when faced with a third parallel crisis: a widespread staffing shortage. According to Restaurants Canada, the industry was short about 60,000 staff before the pandemic, so when workers left restaurants in droves over the past two years, finding (and keeping) workers became even harder. In March 2022, Statistics Canada reported that job vacancies in the accommodations and food service industry surged by 37 per cent, resulting in more than 158,000 unfilled positions. More recent estimates put the number closer to 170,000.

Keegan Ferguson, General Manager of Rizzo’s House of Parm — part of renowned chef Matty Matheson’s restaurant group — has been feeling the pinch.

“The restaurant industry, the hospitality industry, the service industry … every industry continues to be challenged by raising costs. And the inflation isn’t just felt by restaurants, it’s felt by families and the community around us. We’re going through the hardships together,” says Ferguson. “Staffing has been our number one challenge for the past three years. The challenge of finding good, dedicated, and invested team members you can integrate into a business has been harder and harder. And finding a break-even point has been increasingly hard. You’ve really got to be invested in providing your guests a reason to believe in what you’re doing.”

Technology to the Rescue

Health crises, inflation, and labour shortages are obviously hard to predict and beyond the control of the restaurant sector. Fortunately there’s plenty of appetite for innovation, and optimism is never in short supply — because restaurants are nothing if not resilient!

To get a sense of how Canadian restaurants are using technology to get through these challenging times, in Q3 2022 Toast conducted a survey, which included 325 Canadian restaurant respondents*. We found that while restaurant technology has proliferated — with more POS solutions than in just about any other sector — vendor management remains a top-3 pain point for our survey respondents.

Toast is here to change that.

Toast Dives Deep

For the past ten years, Toast has gained the trust of approximately 99,000 U.S. restaurant locations. Our all-in-one, cloud-based POS platform is purpose-built for restaurants. Because we’re restaurant people ourselves — two-thirds of our team worked in restaurants before joining Toast — we understand the unique needs and pain points of the industry.

We also understand that not all markets are the same, so when we set our eyes on Canada as our first international expansion (alongside Ireland and the U.K.) we knew we had a lot to learn about its diverse and world-class food scene. Over the course of the last 12 months, we fielded surveys, asked questions, and refined our recipe for success by building in-market teams and working with early customers like Gusto 54 Group, Carbon Bar and Rizzo’s House of Parm, as well as early partners like 7Shifts, Deliverect, and OpenTable.

We keep coming back to that one finding:

Restaurant technology is everywhere — but it's disjointed and makes life harder for restaurants.
 

That’s the challenge Toast is determined to tackle in Canada.

Restaurants have unique needs, and if those needs are met with an industry-specific technology that’s easy to operate — and that brings together disconnected technologies under one roof — then restaurants have a far better chance of thriving.

We believe if restaurants are able to spot trends as they emerge, they can react swiftly and uncover hidden savings — especially important when dealing with rising food costs. If critical functions like payments and reporting are integrated, exceptionally easy to use, and offer helpful data insights, admin tasks can be simplified and streamlined. If customer support is 24/7/365, restaurants can operate with confidence and onboard with ease. If communication throughout restaurants, especially between front-of-house and back-of-house, is seamless, table turnaround times can improve and servers can spend more time with diners — potentially resulting in larger bills, better tips, and repeat visits.

We believe that if you keep your staff happy, you stand a better chance of keeping your staff.
 

“We’ve found an incredible number of efficiencies since introducing Toast. Having the technology to take orders at the table that go directly to the kitchen is a game-changer,” said Tyler Rutherford, Director of Operations & Culture, Gusto 54 Restaurant Group. “Not only are servers spending more time with guests, which drives additional orders, but the streamlined communication between the front and back of the house means faster table turn times. Every efficiency counts, and every extra gratuity makes our staff more likely to stay. With Toast, there’s finally a solution that speaks our language.”

Survey Says…

According to the Q3 2022 survey conducted by Toast*, food is the biggest cost facing the restaurants we surveyed in Canada, accounting for 15 percent of total sales for those restaurants. Here’s a look at the top 4 costs we uncovered, and what’s left for profit after all of the costs are accounted for:

  • Food costs: 15%
  • Labour costs: 11%
  • Occupancy costs: 8%
  • Restaurant technology: 8%

___________________________

  • Profit: ~10%

For restaurants similar to our survey respondents that have profit margins close to just 10%, every percentage point change in food prices is likely to materially impact the bottom line. That’s why finding repeatable ways to manage costs is critical to success. But restaurants can’t control their costs until they know them.

That’s where Toast comes in.

As a technology that truly has your back, Toast is designed to help customers stay ahead of costs and achieve profitability by tracking food costs week over week. By doing this, restaurants can see where costs are increasing and pivot accordingly. Having a handle on the profit margins of popular dishes — along with the ability to quickly raise prices to keep up with inflation or change offerings to cut down on overhead — is key to putting restaurants in the driver’s seat and helping menus remain profitable.

By looking at the restaurant pain points survey respondents reported, the true value of an all-in-one solution becomes clear.

“A lot of people in restaurants didn’t go to school for finance or economics; they’re in the industry because they love people and hospitality. There haven’t been a lot of solutions that just say ‘here’s the goal and here’s a simple way of understanding it.’ Technology, for me, plays the biggest role in helping your team get to your goals. Toast has done an amazing job of allowing us to see everything in one place. We don’t have to worry about going into different systems for scheduling, data reporting, or invoices. It’s all centralized. And for us, the biggest thing is integrations. We know integrations are the future of restaurants. The more integrations you can plug into the system and take advantage of, the better your restaurant will operate.”
– Keegan Ferguson, General Manager, Rizzo’s House of Parm

The Restaurant ‘Ecosystem’

We like to think of restaurants as ecosystems, in which everyone has a role to play in maintaining a healthy balance. When staff are empowered to provide the best guest experience, they’ll be more engaged with their jobs, thus driving greater tips and more profitability. And technology — if properly developed and implemented — has a critical role to play in supporting that ecosystem.

Canadian restaurants we polled as part of our Q3 2022 survey*, are already making a big investment in technology, at an average of 8% of total sales, yet responses to the survey questions suggest that many of these technologies still leave respondents wanting more. While all of the restaurants in Canada we surveyed use POS software, with handheld usage being nearly universal, respondents indicated that the majority of those handhelds are used only to accept payments. Only 40% of those surveyed using handheld devices were using all-in-one handheld devices, allowing for orders and payments to be taken tableside. At a time when employee engagement is key, this is a massive missed opportunity to support staff and help drive efficiencies across the board.

Handheld devices that empower servers to take orders and process payments from anywhere in the restaurant, such as our powerful Toast Go™ handheld POS, help teams to create better customer experiences, improve turnaround times, and drive repeat visits — even when restaurants are short-staffed.

The Toast Go™ handheld handheld POS has increased table turn times at Toronto’s popular southern-inspired BBQ restaurant, Carbon Bar by around 30 minutes, according to Brad Cameron, general manager, as compared to when Carbon Bar did not use any handheld POS.

“Dinner at the Carbon Bar is a three-hour experience. We’ve got 5-course meals, 6-course meals, or family-style barbecue. So we needed to find a way to shave a half hour off of meals, and handheld at the table is the best way. You want to turn your dining room two to three times a night. Before Toast, we were doing one and a half turnovers — with Toast, we’re close to two. We’re seeing growth week over week, and we think by the end of the summer, we’ll be back to pre-Covid numbers.”
– Brad Cameron, GM, Carbon Bar

Toast Go™ also provides the ability to get visual prompts on ingredients and allergens, and remove them or make changes, thereby improving the guest experience while cutting down on order times. The device — made of durable restaurant-grade hardware — also allows servers to send orders to the kitchen in real time and connect to the Toast kitchen display system, reducing confusion for the front-of-house while improving workflow in the back-of-house.

“What we noticed with Toast is that the speed is better than we expected. The small stuff is so easily fixed. It's like ‘Hey I need a new mimosa button’, and two seconds later you’ve got it. It’s that easy to add,” says Brad Cameron, GM, Carbon Bar. “The back-end is so smooth. It’s the same procedure over and over for all your different facets. You don’t have to find a new drop down menu for this or that — it’s all the exact same. It’s perfect. We’ll be using Toast in our new restaurant that’s opening in July.”

Toast’s all-in-one suite also brings payments and POS together, providing restaurants with reliable reconciliation and transparent pricing through a single trusted partner, while offering a streamlined payment experience for guests and the reliability of offline mode to accept card payments even when the WiFi goes down.

It’s this kind of integrated, restaurant-centric thinking that separates Toast from other restaurant technology in Canada. In a climate of tight margins, staff shortages, and soaring food costs, restaurants need every advantage possible — and they need it all in one place.

With Toast, that’s exactly what they get.




ABOUT TOAST

Toast [NYSE: TOST] is a cloud-based, all-in-one digital technology platform that’s purpose-built for the entire restaurant community and trusted by ~99,000 restaurant locations in the US. Toast provides a single platform of software as a service (SaaS) products and financial technology solutions combined with a growing partner ecosystem of integrations with best-in-class technology providers that give restaurants everything they need to run their business across point of sale, operations, digital ordering and delivery and team management. By serving as the restaurant operating system, Toast helps restaurants streamline operations, increase revenue, and deliver amazing guest experiences. Toast is committed to delivering best-in-class products and services internationally through a dedicated focus on building local in-market teams that listen, learn, and respond to regional specific needs through new product and feature development. For more information, visit https://pos.toasttab.com/ca/  


* To help better understand the restaurant industry, Toast conducted a blind survey of 812 restaurant decision-makers in Canada (325 restaurants across all 10 provinces), Ireland, and the UK from Sep 22, 2022, to Oct 7, 2022. Survey was conducted by a third party provider and respondents were not made aware that Toast was fielding the study. Respondents were offered incentives for participation by a third party survey provider. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.