Fred Soofi has seen the ups and downs of the economy during his 40 years in the restaurant business, but he said now is one of the most challenging times he has experienced.
“Cost of living is high, the housing crisis, interest rate is going up and pushing up the businesses, shortage of labour … there are a lot of challenges,” said the Pasta Polo & Brick Oven Pizza owner.
Businesses face a dilemma – while inflation, high interest rates and high housing costs have put more pressure on consumers, it has also added operation costs to businesses, but they cannot simply pass it to consumers.
“In the restaurant business, meat and fish … everything has gone up 30 to 40 per cent, but you cannot increase your menu by that much because people don’t have money; their income has not increased by 30 to 40 per cent… It’s hard to balance it,” said Soofi.
Soofi, who has an established business, absorbs part of the higher costs by lowering its margin, but said not every business can shelter the costs on their own and survive.
Agnes Mao, managing partner for bubble tea franchiser Truedan Canada, said her industry also feels the pinch with rising costs and a lower demand as people spend less – and the supply chain interruptions, which have exacerbated as a result of the port worker strike, aggravate the situation.
“I know some businesses had their shipment stuck in the port and had to arrange shipment to the U.S., and pick them up by trucks. That’s tripling the original shipping costs. It’s no longer profitable – you just keep the shop open,” said Mao.
And the rising costs of living make it more challenging to retain talent for businesses and adds to the uncertainty of running business in the province, according to Andrew Carros, COO of real estate company Engels and Völkers Vancouver.
“I think everybody’s starting to feel it now, whereas a couple years ago, the government was giving handouts and trying to help people, and interest rates were low,” said Carros.
“Finding employees and paying them what they need to be paid to be living in the city or living anywhere right now is really difficult for B.C. businesses in general.”
The cost of doing business, the acute labour shortage and supply chain disruptions are the top three challenges businesses in the province face now, and “they’re all inextricably linked with each other,” according to Fiona Famulak, CEO of the BC Chamber of Commerce.
She added that many businesses still carry the “significant debt” they took on during the pandemic to keep their doors open, but “the revenues have not returned to pre-COVID levels. Plus, the components of the cost of doing business continue to increase and new elements continue to be added.”
Businesses may be forced to shrink
In an unstable economy, the business community may be forced to contract and be conservative, which does not contribute to a healthy and flourishing economy and community, said Famulak.
“In order for businesses to thrive, they need the certainty of the business environment, they need the certainty of the ability to secure people and or innovative solutions,” she said. “We need to be creating a business environment that is more predictable, more certain, so that businesses can prosper and employ people so that they can then help to feed families and have a lifestyle that they want.”
Mao said she has seen business or potential business owners being more cautious with their investments and those who are interested in starting a business are hesitant to enter the market.
“And existing business owners have to compete on pricing, or reduce staffing to save costs, which is not sustainable.”
She added that her company is waiting to see if things will turn around in the fall.
Meanwhile, support from all levels of government is urgently needed to help businesses while they navigate all the uncertainties, said Famulak.
“They need some financial break … and we’re also asking government to take action to address the unnecessary delays in large project permitting decisions that are … hindering investment opportunities.”
The chamber wants resilient infrastructure in the province, including road, rail, port, and airport infrastructure, “to be able to move our people, our goods and our services efficiently and effectively around the province and in and out of Canada. We believe that the health of a business community impacts the health of a community, which then helps to drive our economy, so it’s really important that businesses are supported,” Famulak said.
More care from each other
As businesses navigate the uncertainties, it’s important to stay innovative and adaptable for a changing environment and look for opportunities even in a bear market, according to Soofi.
“Businesses have to come up with new projects, new ideas … you have to be agile and ahead of your game,” he said.
His restaurant created a “take and bake” product during the pandemic where people could come and pick it up at a discount and bake at home, and that, according to Soofi, “helped us survive COVID.”
“It is not a good time to run a business, but that doesn’t mean they shouldn’t start … but you have to be careful what you’re doing and educate yourself on the trade you’re doing, the business and be willing to make changes.”
And for Carros, uncertain economic times like these reminds businesses of the importance of supporting and taking care of each other.
“This world is confusing right now. I don’t think anybody could give you any definite answer on anything,” he said. “What I can tell you is, I think what this world needs right now is more genuine care for their people and their employees and their people around them and really personalizing the experience. Any times of change in the world, you always go through a little bit of unrest, but on the flip side of that, there’s usually new, great opportunities for people, and usually people see the light a little bit more, so I keep saying, I think being nice is coming back into style.”
