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More Thunder Bay businesses closed than opened in past year, prompting call for national inflation plan

Both Hands Wood-Fired Pizzeria and Bakery has been a staple pizzeria in Thunder Bay, Ont., for over 20 years, with owners Derek Lucchese and Sue Holloway baking handmade pizza, bread and granola in their grand wood-oven stove for loyal customers.

But on July 1, Derek and Sue were set to hand over the restaurant keys to Paul Gibson and Michelle Murdoch-Gibson of Rowan Tree Collective.

While Lucchese felt it was time to move on from the restaurant, he said he’d be lying if inflation hasn’t tremendously impacted his business financially.

“We have not, to be honest, kept up with inflation and with our ingredient prices to the extent that they’ve been rising,” said Lucchese, “partly because they’ve been changing so much so frequently. It costs money for signage and to be constantly updating everything. So that’s really made a huge impact on us.”

Lucchese said inflation has not made things easier over the past year, and he’s still feeling the impact from the COVID-19 pandemic.

“I’d say we’re still only maybe halfway or three-quarters of the way back to ‘normal’ pre-pandemic times, especially for the dine-in part of our restaurant. Either people have moved on and are frequenting other places, or they’re still not feeling comfortable or they don’t want to be coming out for dinner like they did before.”

Businesses facing ‘economic pressures’

Lucchese and Holloway aren’t the only business owners who’ve felt inflation’s impact. 

Since last July, more businesses have closed in Thunder Bay than have opened. On average, six more businesses closed than opened each month, according to a Statistics Canada data analysis by Karl Skogstad, an economist at Lakehead University. 

Overall, for the first half of 2022, monthly data shows new businesses outnumbered closures. 

Though the data doesn’t list a reason for the closures, and doesn’t paint a complete picture, it could point to what a difficult year it’s been amid spiking inflation, he said.

“This net loss may just be a common occurrence, part of a larger cycle the region experiences, or it may be a result of the economic pressures we are facing.” 

Both Hands Pizzeria and Bakery's rack of baked loaves of bread.
Lucchese says he started selling his bread at the Thunder Bay Country Market in 2002. He says the new restaurant owners plan to keep the classic Both Hands products the same. (Taylor O’Brien/CBC)

Skogstad said high inflation is creating a challenging market for businesses.

“Inflation is high, the cost is going up and in economics, when we think of high inflation, there’s so much uncertainty going on,” said Skogstad.

Consequently, he said, inflation has created a tricky situation.

“Inflation is hurting people, and because firms are owned by people, it hurts business owners.”

There’s not much that can be done locally to ease the inflation pressures, Skogstad said. Since inflation is a national issue and doesn’t just affect Thunder Bay, there needs to be a national approach to solve the problem, he said.

“There’s no painless solution, because if there was, we would have implemented it.”

Across Canada, stores have closed down because of the constant rising cost of rent and living.

In Ontario, businesses on Toronto’s Roncesvalles Avenue recently shut their doors because they couldn’t afford a 30 per cent rent increase.

Other small businesses in Windsor-Essex are struggling to survive due to rising grocery prices that are forcing customers to change their purchasing habits.

Canada’s inflation rate decelerated to 3.4 per cent in the year up to May, Statistics Canada said last week, its lowest level in nearly two years and a sharp decline from the 4.4 per cent pace in April. 

The Bank of Canada has been aggressively raising interest rates over the past several months in an attempt to rein in inflation. The theory is that as rates rise, consumers are squeezed by higher debt payments.

With more money going toward servicing their debt, Canadians have less of it to spend anywhere else. That tends to slow down the economy and bring down prices

Skogstad added there’s no obvious policy to him that could help some struggling businesses without hurting others. He said an option could be for the government to give payments to each struggling business, but that money would eventually come from taxpayers.

“You could do that, but just understand that you’re helping one and harming another group. We call that a ‘transfer’ in economics. So if you’re fine with that, sure, you can have that policy, but I bet there’s people who will not be fine with it.”

Joey (left) and Danielle Roy (right) are standing at the cash register in Authentique, the store they co-own together.
Joey and Danielle Roy, left to right, have owned Authentique gift shop since 2018. Because of the rise in the cost of living, Danielle says, they’ve had to increase their prices. (Taylor O’Brien/CBC)

Higher prices due to shipping costs, says shop co-owner

Danielle and Joey Roy have been co-owners of Authentique gift shop for five years. Because of the rise in the cost of living, Danielle said, they’ve had to increase their prices.

“A lot of things have had to go, a lot of our products have increased in price, and we’ve always prided ourselves on having really reasonable prices. But we just can’t fight it.”

Danielle added many retail items are made in China, which means growing shipping and container costs have forced the Roys to escalate their prices.

Joey said he and Danielle are “some of the lucky ones” because they can still successfully run their business while managing inflation themselves.

“I think it’s the people that are just on the borderline of what they can meet financially that would be hurting more,” said Joey. “We haven’t hit that threshold where we really feel crunched yet. So luckily for us, our business is versatile enough that business is still good enough.”

As for Lucchese, he said he also had to raise prices a couple of times and knows growing costs impact his customers just like it impacts him and his family.

“It’s a real drag that way, but the reality is that for us to have kept up with that, we would’ve had to have actually raised our prices a lot more and a lot more frequently. So we’ve just been doing the best we can.”

As Lucchese prepared to leave Both Hands, he said the reality for him and his family is they’ve been trying to hold on.

“We’ve just been sort of trying to coast as much as possible. It’s been affecting us on both ends, and realistically if our intention was to keep running the business then we probably would’ve just been raising our prices more aggressively and doing some other changes to try and keep up.”

A hanging beige and wooden sign reads "Both Hands wood-fired pizzeria and bakery.:
Lucchese says one of the reasons he chose Paul Gibson and Michelle Murdoch-Gibson of Rowan Tree Collective to take over Both Hands is because of their ideas to appeal to a broader group of customers. (Taylor O’Brien/CBC)

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