Restaurants are facing a critical shortage of workers that's impeding new business and limiting capacity during the holiday season, a critical time of year for profitability, industry experts say.

Veteran chef and restaurateur Hemant Bhagwani had planned to open his new restaurant, Popa, in Toronto's Bayview Village shopping centre on Dec. 1, but still doesn't have enough staff to operate.

For the key position of chef, "not a single application has come in," said Bhagwani. Although Popa will specialize in Burmese cuisine, which he travelled to Myanmar to learn, Bhagwani said he's not holding out for a chef with specialized skills. "I don't mind people from any other cuisine — Mexican, French. I can train them."

In the third quarter of this year, the most recent period for which numbers are available, there were 67,370 vacant jobs in food service and drinking establishments across the country, according to Statistics Canada, the highest it's been in nearly five years.

Record low unemployment, shifting demographics and competition for workers from a slew of new restaurants and food delivery services are making it tough for restaurants to find enough workers to operate at capacity — opening the patio in summer or hosting private parties during the holidays. Executing expansion plans seems impossible.

Restaurant owners and industry associations say they won't be able to rectify the problem without substantially increasing immigration to Canada, loosening the rules about who can move here to work in hospitality.

"It's been very tough," said Bhagwani, who has opened dozens of food establishments in the Toronto area, including the Amaya chain of Indian restaurants. "I had to set up a central kitchen because I could not place chefs or cooks in each restaurant." Though he said he's offering competitive salaries, he's perennially shorthanded and actively recruiting.

"I have five restaurants that have extensively had ads for the last five months and have not been able to get a job match for one person locally," he said.

He did receive one email inquiry about a dish-washing job recently. The sender was from Dubai.

Hemant Bhagwani had hoped to open his new restaurant, Popa, in Toronto's Bayview Village shopping area on Dec. 1, but he hasn't been able to find the staff he needs to open the doors. (Laura MacNaughton/CBC News)

In the meantime, he still has to pay $20,000 per month rent at Popa while he works to find the staff he needs to open the doors.

Bhagwani is not alone, said David Lefebvre, vice president of industry association Restaurants Canada.

What used to be referred to as labour shortages, "now there are some places in the country we call them labour outages because you just cannot open a restaurant or find any workers to work at your place," he said.

Quebec, British Columbia and some parts of Atlantic Canada have the worst shortages right now, said Lefebvre. "But you see it in every provinces. You get some places like Banff in Alberta; even though Alberta has been in the economic slowdown, you still have some labour shortage in the food service industry."

Collision of demographic, economic forces

There are a number of reasons why this is the case, including that food services traditionally attract a young workforce and young workers are now a smaller portion of the population. Canadians under age 25 made up 48.1 per cent of the population in 1971, but were projected to make up only 28.2 per cent in 2019, according to Statistics Canada.

But there are other forces draining the restaurant labour pool. The overall unemployment rate reached historic lows in 2019, meaning young people who might previously have worked in restaurants while waiting to land a position in another field instead have their pick of jobs.

Labour Force Survey data shows that since 2016, workers 24 and under have increased their numbers in fields like tech, transportation, retail and education.

Also, skyrocketing housing costs, especially in Canada's biggest cities, make it harder to get by on a line cook or server's salary — even with a heavy take home from tips.

Bhagwani said the housing shortage is particularly hard on his kitchen staff. "They used to pay $1,200 for a basement apartment; now they pay $1,800."

Why not simply increase salaries and let free market forces correct the problem?

Pay has gone up, said Ian Tostenson, president and CEO of BC Restaurant and Food Services Association." For a kitchen worker, three or four years ago wages were $13 to 14, now they're $19 or $20."

The association has put also together optional benefits packages owners can offer to part-time employees who work 20 hours or more per week.

People stand line for the opening of a new Cheesecake Factory restaurant at Yorkdale shopping centre in Toronto on Tuesday Nov. 21, 2017. (Giordano Ciampini/The Canadian Press)

Stiffer competition

In Toronto, Hemant Bhagwani has even offered ownership shares and profit sharing to entice both chefs and front-of-house staff to join his team.

But Bhagwani said there are limits to how much pay can increase given tight profit margins.

Rent, labour and food costs have all spiked in the last three to five years. "Our profit margin used to be 15 to 18 per cent. Now our profit margin has dipped to probably five per cent. And we can't even increase our prices with all these Ubers and Skip the Dishes. We're also competing with them also."

Consumers have more ways than ever to avoid dirtying dishes in their kitchens at home, between a host of new delivery services, the breadth of prepared foods on offer at the grocery store and U.S. chains such as Eataly and The Cheesecake Factory opening in Canada. Even retailers like Nordstrom and Restoration Hardware have moved into the food game with in-store cafes.

Tech offers a gig-economy solution

Some restaurants are turning to tech solutions to fill staffing gaps. Toronto entrepreneurs Erika Mozes and Josh Karam created an app called Hyr to connect restaurants that are short of staff with workers who can fill in on a per-shift basis.

The Hyr app, created in Toronto, connects restaurants with workers who can fill in on a per-shift basis. Workers and restaurants post profiles and review each other. Pay is often a little higher than standard and workers get paid by the app within 48 hours. (Submitted by Hyr)

Both restaurants and workers create social-media-style profiles and can rate each other. In some cases the pay is slightly higher or the tips likely to be generous, but one of the main incentives for workers is that they receive their pay within 48 hours of their shift, said Mozes.

"As a business, you can download hire, create a profile and literally within minutes be able to post a shift," she said.

Erika Mozes and her partner Josh Karam founded Hyr, an app that connects businesses in the hospitality industry with workers who can fill in on a per-shift basis. They got the idea while sitting on a patio at a restaurant that was understaffed. (Submitted by Hyr)

Bartender Collin Heath said he loves his full-time job, but because he easily gets his 40 hours per week over the course of three or four shifts, he has time to pick up shifts through Hyr.

"Toronto's a really extremely expensive city to live in. And at some point you have to do everything that you can in order to make money," said Heath. "It could be the 28th of the month and I have until the first, which is two or three days, to pay rent, and I know if I take the right job with Hyr, I'm paid within two days and that money is coming in."

Businesses ask for looser immigration rules

At Canada's biggest chef's school, the Centre for Hospitality and Culinary Arts at Toronto's George Brown College, enrolment by Canadians has plateaued, while international students have increased by six-fold between 2009 and 2019, said director Tony Garcia.

Opportunities abound for graduates. "There are approximately six field placements available for every student," he said.

First year student Nhuy Mai first moved to Toronto from Vietnam to study English, but stayed for George Brown's program when she decided to pursue a career in hospitality.

Nhuy Mai, a 1st year culinary arts student at George Brown College, moved to Toronto from Vietnam to study. She said her plan is to work for a few years after graduation and then to open her own business here. (Laura MacNaughton)

"Cooking is my passion so I chose this school," she said. Right now she works part-time at Thai restaurant Mango Garden, and hopes to continue working in Canada after graduation, then open her own Vietnamese restaurant here within a few years.

I cannot open a restaurant without hiring a foreign worker inside my kitchen, period. - Hemant Bhagwani, restaurateur

Hospitality needs more people like her, said Lefebvre of Restaurants Canada. He said the industry wants the government to loosen rules about who can come to Canada to work in the field so it's not just trained chefs who can move here, but front-of-house and other kitchen staff, too.

He said the organization wants a "multi-pronged" approach that also makes it easier for people on employment insurance or students with bursaries to be able to work more hours before having their benefits clawed back.

But without dramatically increasing the number of immigrants to this country, said Lefebvre, the restaurant industry expects its staffing problems will continue.

Hemant Bhagwani concurs. "I cannot open a restaurant without hiring a foreign worker inside my kitchen, period."

As for Popa, his Burmese restaurant in waiting, Bhagwani will soon take matters into his own hands.

"I think it's time to open up so I will jump in myself and probably start cooking."