LCBO strike creates uncertainty for restaurants in already difficult times, says industry association

While the LCBO strike could be an opportunity for private liquor retailers and grocery chains that sell beer and wine, it comes at a time when some Ontario restaurants and bars are already facing significant challenges.

LCBO employees, represented by the Ontario Public Service Employees Union (OPSEU), began a strike on July 5. The LCBO said its stores will remain closed for two weeks, while online orders with free home delivery will still be available. The LCBO had also planned to keep five stores open for bar and restaurant shopping on July 10, but scrapped those plans “in light of threats from the OPSEU to strike those stores.” Instead, licensees will be able to place smaller orders online.

“It’s another very difficult thing that restaurants have to deal with,” said Kris Barnier, vice president of Restaurants Canada for Ontario, in an interview with Yahoo Finance Canada.

According to Restaurants Canada, about 14,000 of Ontario’s roughly 38,000 restaurants serve alcohol. Barnier says it’s difficult to say exactly how many of those establishments rely on LCBO products, but “it’s likely the overwhelming majority.”

“This is significant. In a normal restaurant, about 30 percent of revenue comes from alcohol sales,” Barnier said, noting that restaurants that rely less on beer sales and more on spirits and wine – the main LCBO products – will likely face a greater challenge.

“Either way, alcohol is a huge source of revenue for restaurants and bars. When that is interrupted, it creates real challenges.”

The restaurant industry has been slow to recover from the challenges of the COVID-19 pandemic. Barnier says that before the pandemic, about 12 per cent of Restaurants Canada members were not profitable. Today, that number is 47 per cent, largely due to rising costs of food, labour and insurance.

The story goes on

At the same time, the cost of living has increased for consumers and many of them are cutting back on spending on other things. A survey by restaurant software company TouchBistro found that Canadians are increasingly turning to takeout instead of eating out due to tight budgets.

The restaurant industry is not the only one to feel the effects of the LCBO strike. Cal Bricker, CEO of Spirits Canada, an industry group that represents nearly 70 percent of the spirits products sold by the LCBO, says the strike will mean “massive disruption” for producers.

“It’s the only place we’re allowed to sell,” Bricker said.

“I expect all of our members have contingency plans in place to deal with the situation, but I know everyone is hoping the matter 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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