Yahoo Finance LCBO strike creates uncertainty for restaurants at already difficult time, says industry group
While the LCBO strike may provide an opportunity for private alcohol retailers and grocery chains selling beer and wine, for some restaurants and bars in Ontario, the strike comes at a time when they are already grappling with significant challenges.
LCBO workers, represented by the Ontario Public Service Employees Union (OPSEU), went on strike on July 5. The LCBO says its retail locations will stay closed for two weeks, while online ordering remains available with free home delivery. It had planned to also keep five stores open for in-store shopping for bars and restaurants on July 10, but scrapped those plans "in light of OPSEU threats to picket these locations." Licensees will instead be able to make smaller orders online.
"It's one more very difficult thing for restaurants to deal with," Restaurants Canada's vice-president for Ontario Kris Barnier said in an interview with Yahoo Finance Canada.
Restaurants Canada says about 14,000 of the approximately 38,000 restaurants in Ontario serve alcohol. While Barnier says it's difficult to know exactly how many of those establishments are dependent on LCBO products, "it's probably going to be the overwhelming majority."
"It's significant. It's commonplace that in a standard sit-down restaurant, about 30 per cent of revenue comes from alcohol sales," Barnier said, noting that restaurants which are less dependent on beer sales, and more reliant on spirits and wine – key LCBO products – will likely face a bigger challenge.
"One way or another, alcohol is a huge revenue stream for restaurants and bars. When that is disrupted, you create some real challenges."
The restaurant industry has been slow to recover from the challenges brought on by the COVID-19 pandemic. Barnier says that pre-pandemic, approximately 12 per cent of Restaurants Canada's membership were not profitable. Today, that number is at 47 per cent, he says, due in large part to soaring food, labour and insurance costs.
At the same time, consumers are also facing a higher cost of living and many are cutting back on discretionary spending. A survey from restaurant software company TouchBistro found that Canadians are increasingly turning to takeout over dining-in at restuarants as they tighten their purse strings.
It's not just the restaurant industry that will feel the impact of the LCBO strike. Cal Bricker, the CEO of Spirits Canada, an industry group that represents almost 70 per cent of the spirits products sold by the LCBO, says the strike will be "a massive disruption" to producers.
"It's the only place we're allowed to sell," Bricker said.
"I expect that all our members have contingency plans in place to try and manage the situation, but I know everybody is hoping that this thing can be resolved as quickly as possible."
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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