Soaring prices and staff shortages are stressing restaurant owners as the pandemic drags on

Doreen McDonald boasts about her restaurant's long-standing reputation for delivering a mouth-watering plate of fish and chips, one of the specialities at Wild Horses Pub and Eatery.

But she's not quite as upbeat when it comes to talking about the increasing cost of preparing the food she serves to customers at her Portugal Cove-St. Philip's business.

She uses words like "astronomical" to describe the increasing cost of doing business as the pandemic drags on and supply bottlenecks and global production issues push her and others to the brink.

With business already down by roughly 40 per cent because of the COVID-19 pandemic, she's now coping with a sharp spike in the price — and sometimes the availability — of everything from cooking oil and propane to disposable gloves and potatoes.

'I don't make any money'

Like many small businesses, an acute staffing shortage is only adding to the uncertainty, forcing her to reduce business hours.

"I don't make any money. I haven't made any money in two years," McDonald said recently.

As winter approaches, and fewer people walk through the doors and government pandemic supports dries up, McDonald says she may soon have to face a harsh reality: to keep struggling to stay afloat, or to put Wild Horses out to pasture permanently.

"I'm to the point now I have to make enough to pay a salary and pay overhead each week, and if I can't do it, then it's over," she said.

Her biggest concern? The fate of her small staff.

"I hate the thought of having to tell the staff there's no more work. It's done. So I keep pushing on, hoping that this year coming up might be different with more people vaccinated. But if much more goes onto the cost of things, it's going to be too hard," she said.

Frying up some costly bacon

CBC News spoke to a handful of restaurant owners in recent days who say they're being buffeted by a steady barrage of challenges, with the requirement to screen all customers to ensure they are fully vaccinated being the latest financial hit.

The owner of one large restaurant in the St. John's area, who asked not to be named, said his monthly expenses for four essentials — propane, chicken wings, beef and canola oil — has gone up by $11,000 in the past year.

On top of that, the owner said he's paying double the price for staples, such as bacon, while also absorbing increases to the minimum wage and insurance rates.

Thousands of restaurants across Canada have closed since the onset of the pandemic, but Doreen McDonald hopes she can avoid that fate.

"I've never felt I can't do anything about it as much as I do now. I feel like I'm up against a brick wall now," she said.

Trying to protect customers

With costs going up sharply, there's another predicament facing eatery owners: how much can be passed on to consumers?

At Brown's Restaurant in Whiteway, Trinity Bay, owner Barb Brown has been doing her best to keep her menu prices from increasing.

"We've absorbed most of it, but I don't know how long we can do that," said Brown, who's operated the restaurant that is part of the Blazing Horizon resort, for three decades.

"If I put my prices up too much, it's going to be out of reach for a lot of people."

Brown said she's fortunate to have had some profitable years in business, and can handle — for now — the price shock from her suppliers. But if the situation continues, she'll have no choice next spring but to make some adjustments. And because of her staffing shortage, she also expects to reduce the offerings on her menu.

Meanwhile, Mithun Mathew's business plan for operating an Indian takeout restaurant and grocery store in St. John's has been turned upside down by the pandemic and resulting economic fallout.

Mathew owns SpiceX on Empire Avenue, which opened in February 2020, just a few weeks before the onset of the pandemic. SpiceX caters primarily to international students at Memorial University, with a commitment by Mathew to provide affordable and quality Indian food.

But that's becoming harder to do these days, he said.

"As a business owner, I would say it's definitely a bit stressful. You don't know what's going to happen in the future," he said.

In addition to higher prices, he said, it's becoming harder to find some products. Recently, he struggled to get chicken breasts and onions in larger quantities.

But one of his biggest frustrations? Takeout containers.

Last year, he would pay $20 for a case of containers, but they've become hard to find locally, so he's paying around $60 a case to suppliers outside the province.

For now, Mathew is determined to sacrifice profit for the benefit of his customers.

"I find my customers are happy with the product and services, so for now I give priority to that," he said.

Supply challenges and strong demand

Meanwhile, market watchers say supply challenges and strong market demand will continue to put inflationary pressure on the Canadian economy, which means there's no immediate relief in site for either consumers or business owners.

The latest economic outlook from Scotiabank, for example, said the ongoing supply disruptions are temporary, but are expected to be more persistent than expected.

Marc Desormeaux, a senior economist with Scotiabank, said he expects inflation to peak in the next six months or so, with a "moderation of price gains" to follow as the supply challenges are overcome.

It's a troubling outlook for business owners like Barb Brown, but she refuses to give up hope.

"I'm very optimistic that going forward will be challenging, but as rewarding as it's been for 30 years," she said.

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