Experts see the restaurant industry pivoting, and for Greater Victoria in 2025, they think that could mean an increase in smaller takeout places with high volume and one-of-a-kind establishments.
Restaurant bankruptcies were at their highest monthly rate in over a decade in January 2024, jumping 112 per cent. “We’re seeing a lot more restaurants going into bankruptcy,” said Ian Tostenson, president and CEO of BC Restaurant and Foodservices Association (BCRFA).
But at the same time, Tostenson is seeing restaurants opening with one type of business model that seems to be filling in the gaps.
“We're seeing, I know in Victoria, a lot of smaller, more specialty ethnic-style restaurants that don't occupy big spaces. They don't have a lot of labour attached ... Ramen, sushi, and those kinds of places,” Tostenson said.
Year-over-year growth in nominal quick-service restaurant sales, as of October 2024 in Canada, was higher at 5.8 per cent than full-service restaurants, which only experienced 1.9 per cent growth.
While it is difficult to determine how many restaurants are closing in Victoria year-over-year, one thing seems certain: it is a difficult industry even without the host of challenges that restaurants face today.
“It’s a business where there’s a lot of entry and exits,” said Pascal Courty, a professor of economics at UVic.
“Now the break-even point is a bit higher. I don't necessarily think it's gonna mean fewer restaurants. I think we're gonna see different types of restaurants that can survive. Fixed cost goes up a little bit, and now you have to move to a model where you have to have more volume,” he said.
The need to pivot comes from a plethora of problems plaguing restaurant owners. Tostenson cited rents, people not spending as much and labour shortages. The cost of food has also gone up, and according to the Food Price Report, it's estimated to increase by three to five per cent again in 2025.
Jeff Bray, executive director of the Downtown Victoria Business Association (DVBA), points out another complication of fewer office workers in downtown Victoria.
While Bray doesn’t know if there’s any magic bullet for restaurants to overcome the current hardships, he has seen strategies that have helped downtown restaurants.
Anecdotally, he said that “smaller independent, unique, slightly funky lounge restaurant cafes that offer something you can’t get anywhere else” appear successful. Also, providing a "unique lunch offering" to encourage people to make the extra effort to go out for lunch.
He mentioned Block, Tourist Wine Bar and Wind Cries Mary as good examples of unique, one-of-a-kind restaurants that seem to be doing well.
“That’s what people who live in especially the urban centres are looking for,” he said.
Though, some unique sit-down restaurants doing well in ratings, such as Joie Grillades, are still citing difficulties because of high costs.
How local independent restaurants will fare in 2025 remains to be seen.
In a 2025 outlook, Modern Restaurant Management found national restaurant chains provide benefits to franchise owners including lower-cost capital, discounted pricing, strong brand recognition and national marketing campaigns.
It also estimates automation and AI will play a bigger role in restaurant back-of-house operations, using Chipotle as an example of a chain that has rolled out robotic technology like automated avocado slicers to cut down manual labour costs.
Despite what may look like growth in chains, takeout and smaller establishments with high volume, Bray maintains there is something special about the dining scene in Victoria and what is available.
"There's so many creative entrepreneurs in the hospitality sector in Victoria," he said.
