Continuing a trend from the last fiscal quarter, AMS businesses continue to fall short of their financial targets. While the businesses are not collectively in a deficit, they have not been meeting their net contribution expectations as the AMS had expected.
The student union’s Q3 financial report — presented to Council in late March — reported a net business contribution of $334,880 compared to a projected contribution of $460,283. Several outlets such as the Pit pub, Blue Chip, Grand Noodle Emporium and the Gallery trailed below budget expectations.
AMS VP Finance Gagan Parmar primarily attributed the shortfall to a drop in foot traffic and less spending by students. He also cited a decline in alcohol sales at the Pit pub and the Gallery, which have been making adjustments in order to generate more revenue. “The people that do come [to these establishments] are also drinking less,” he said.
This pattern is reflective of broad generational shifts in youth alcohol consumption. Gen Z and Millennials are drinking less alcohol compared to previous generations. Last month, Statistics Canada reported that alcohol sales dropped 1.6 per cent in the 2024-25 fiscal year.
Accelerating quickly, this trend is reshaping the bar and alcohol industry across the country. For venues such as the Pit and the Gallery, which rely on alcohol as part of their revenue base, fewer students drinking adds to an already tense line of revenue.
To counter these trends, AMS businesses have adapted. The Gallery, which is $1,658 behind its projected net contributions, refreshed its menu, revamping happy hour to compete with other student-favorite spots such as Browns Crafthouse. Parmar said that the Gallery has pivoted towards price reductions and new cocktail items in an attempt to ensure growth.
Blue Chip has made modifications by adding protein-drink options to compete with other cafes such as Starbucks, which released their own protein drink menu last fall. Regardless, Blue Chip is still $54,000 behind on its reforecasted contribution projections.
Other businesses fared better. The Nest Catering and Conferences exceeded expectations this quarter thanks to some last-minute bookings. However, Parmar noted that the main obstacle for this division was less wedding bookings, especially during the summer. The division hosted a “trade show earlier in the year” which helped secure more business attractions. The Nest Catering and Conferences is $44,289 ahead of projections — a positive variance of six per cent compared to being down by seven per cent in Q2.
When asked about concrete steps the AMS may be considering in order to address these losses, Parmar pointed to “revenue enhancement” and adjusting expenses to offset these gaps. He added that the AMS’s food and beverage administration is making efforts to cut back after “realizing that revenues are not in line with where they want them to be.” Some savings from these departments may be used to offset imbalances in other budgetary areas.
Parmar said these less-than-expected net contributions were “just a reflection of the broader economy,” as Canadian food and beverage businesses report falling sales.
According to a report by Restaurants Canada — an industry advocacy coalition — 44 per cent of Canadian restaurants surveyed were operating at a loss or just breaking even last November, while 60 per cent of food service operators reported worse profitability last year compared to 2024. Restaurant profit margins have been decreasing over several years, putting strain on the industry.
These industry-wide setbacks translate directly to lost revenue, Parmar said, further noting that the AMS is facing double exposure: not only does the food and beverage industry face rising costs, but consumers are also cutting back on discretionary spending.
Less student discretionary spending and foot traffic are issues, to Parmar, that “may persist for a while.”
While the AMS faces decreased business revenue, Council has had to adjust its budget forecasts. In January, Council passed a reforecasted budget, planning to cut expenses by $115,000 and projecting a $350,000 deficit, compared to an originally planned surplus.
Parmar said that this reforecast was not intended, but reflected current economic trends. He added that the aim is to mitigate this deficit as much as possible by June, when the Q4 and full-year reports will be presented to Council.
Through targeted interventions such as menu changes, online orders, efficient line management and promotion of the AMS points card, Gagan said the AMS aims to continue stable operations into the final quarter.
“Our goal and wish is [for recovery] as soon as possible. But [our profitability] is more reflective of the general economy,” Parmar said.
