Many Calgary businesses are shutting their doors, but it’s not all doom and gloom

If you follow the news these days, you might have the impression that it’s all doom and gloom for businesses in Calgary as they are shutting their doors in increasing numbers.

Just this past weekend it was announced that Buffalo Wild Wings had closed its two city locations, joining a growing number of businesses in the hospitality industry that have succumbed to the economic challenges of our time.

Before that, small businesses like Milk Tiger, The Rose and Crown, Blind Beggar, Windsor Pizza, and YYC Cycle in Kensington all closed.

Even big hitters such as Nordstrom and Bed Bath & Beyond announced impending closures.

But the reality is that it’s not all grim out there.

Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, says that at the same time that businesses are closing, even more are launching including The Banquet in Mahogany, Satsuki in Kensington, and Wonder Donuts in Discovery Ridge.

“When you look at it, what we see is that we have actually a very high rate of businesses opening and being created,” she says.

“What that really says is we’re responsive to the market and that people see opportunities and they’re willing to take that risk and meet the needs that they see are unmet in the market.”

Other new businesses opening include Munch, Egg & Spoon, Jams Diner, Hitman’s Bar, and Tubby Dog has re-opened.

Calgary has many advantages

Yedlin says Calgary can offer many advantages to businesses, such as downtown office availability and affordability, and being able to work with financial institutions such as ConnectFirst and the ATB Entrepreneur Centre for financial support.

“That’s the other piece. We do know how to support small businesses from a financial standpoint and that really helps the creation of new businesses in the city,” Yedlin adds.

But that doesn’t mean there aren’t challenges.

According to the 2023 Q1 Canadian Survey on Business Conditions, conducted by Statistics Canada in collaboration with the Canadian Chamber of Commerce, 55.1 per cent of Calgary-based businesses are concerned with rising costs, compared to 43.4 per cent in Q4 2022—well above the national average.

There are still challenges

Businesses are also grappling with a more acute labour shortage combined with ongoing supply chain issues, but have not adopted technology to offset rising costs and limited access to labour.

Despite those challenges, 62.5 per cent of businesses are optimistic about their future, up from 57.5 per cent last quarter, according to the Calgary Chamber.

“Compared to the national average, Calgary businesses are more concerned about rising costs, despite sentiment [that] Alberta will be relatively stable through a looming recession,” Yedlin says.

“Calgary businesses are resilient, but we need governments to double down on some of the key initiatives underway to address rising costs, the skills mismatch evident in a higher unemployment rate, and support technology adoption.”

Reason for optimism

Yedlin has a positive outlook.

“The business conditions, I can’t tell you a time when I feel like everybody’s as optimistic as they are, even with some headwinds that we know are out there.”

The optimism stems from the fact that the province is an important supplier of energy at a time when energy security is a global issue; the province is also a leader in the transformation of the energy sector; and the economy, in general, is diversifying.

There’s also the presence of family offices and an angel capital network to support new business.

“There’s so much variety in what makes up the Calgary business community,” Yedlin says.

Some cold, hard numbers

The chamber report stated that margins are slimming for Calgary businesses in Q1, with about 39 per cent anticipating profitability to decrease in the next quarter, largely because 56 per cent are anticipating higher operating expenses with less operating income.

There are concerns about how this will affect businesses long-term and whether this will increase already burdened debt loads.

According to Alberta government data, Calgary had 47,505 businesses in 2021, declining 0.85 per cent from 47,910 in 2020.

The number of businesses in Calgary has held steady over the last five years: 47,226 in 2017; 47,737 in 2018; and 47,878 in 2019. The number peaked at 49,368 in 2013.

Also, the number of incorporations in Calgary rose by 18.5 per cent year-over-year in 2021 to 16,331.

The government data indicates 95 per cent can be classified as small businesses.

Downtown is coming alive again

Brad Parry, president and CEO of Calgary Economic Development, says growth in the city’s business sector is starting to happen with the downtown coming alive again as people are returning to offices and new companies are moving to Calgary

“We’re seeing a lot more activity… We’re seeing some positive news,” he says.

“There’s some new restaurants opening. We’re seeing other types of things starting to build up, which for us, it’s an amazing thing because we know that job growth for our city is going to come from within, not from outside.”

Parry says 70 per cent of all jobs will be created by smaller Calgary companies.

“So that to me is an exciting sign for our small business community,” he adds.

Parry said Calgary continues to attract companies, while others are expanding their operations. Net migration to the city is also fuelling economic growth.

“What’s interesting is, the numbers are younger-skewed. It’s not just the older population that’s coming back. The younger ones are coming in too. That’s driving small business growth. That’s providing that vibrancy and giving us an audience to talk to.”