A new Restaurants Canada survey reveals the majority of foodservice businesses across the country are still losing money and could take at least a year to return to profitability.
TORONTO, July 06, 2020 (GLOBE NEWSWIRE) — The majority of foodservice businesses across the country are still operating at a loss and could take at least a year to return to profitability, according to a new survey from Restaurants Canada.
“Restaurateurs are eager to help rebuild the economy and revive neighbourhoods, but they’re going to need continued assistance from government to remain operational under ongoing restrictions,” said David Lefebvre, Restaurants Canada Vice President, Federal and Quebec.
Survey reveals many restaurants expect a year or more to recover
More than half of respondents whose operations are either open for takeout or delivery only, or now offering dine-in services under new restrictions, said they are continuing to operate at a loss.
When asked how many months they expect it will take their business to return to profitability:
- 13 per cent said six months or less.
- 31 per cent said between seven months to a year.
- 36 per cent said between a year and 18 months.
- 20 per cent said more than 18 months.
For the third month in a row, more than 90 per cent of respondents reported lower sales compared to the same period last year.
Restaurants will need continued support to contribute to Canada’s recovery
A thriving foodservice sector is critical to Canada’s recovery from COVID-19:
- Restaurants and other foodservice businesses are the fourth-largest source of private sector jobs and number 1 source of first jobs for Canadians, typically employing 1.2 million people.
- Restaurants support a wide variety of supply chain businesses, indirectly supporting more than 290,000 jobs.
- Restaurants typically spend more than $30 billion per year on food and beverage purchases, playing a critical role for Canadian farmers and the agri-food sector.
Not only was the foodservice industry among the first and hardest hit by the impacts of COVID-19, the sector will also be among the slowest to return to profitability. Given this reality, Restaurants Canada is calling on the federal government to extend and strengthen support for foodservice businesses in the following areas so they can continue contributing to Canada’s recovery.
1) Assistance with labour costs
Seventy-five per cent of restaurant operators who responded to the latest Restaurants Canada survey said they are receiving the Canada Emergency Wage Subsidy (CEWS).
Restaurants Canada is continuing to recommend the following changes to this program to ensure foodservice businesses can bring more Canadians back to work as they continue to reopen and recover:
- Continue to keep the subsidy available for as long as restrictions are in place. Instead of the 75 per cent wage subsidy suddenly dropping to zero, support should be reduced gradually as businesses get closer to manageable levels of revenue variance while operating under ongoing restrictions.
- The 30 per cent revenue decline threshold should be scaled to support restaurants in their recovery, instead of serving as a disincentive to improving sales at the risk of losing access to the subsidy while businesses are still operating at a loss.
2) Rent relief and commercial tenant protections
At the start of June, half of restaurant operators across the country were still dealing with landlords unwilling to participate in the Canada Emergency Commercial Rent Assistance (CECRA) program or any other rent relief arrangement.
While Restaurants Canada welcomes the federal government’s commitment to work with the provinces to extend the program by a month, further action is needed to sufficiently address ongoing challenges with rent:
- Support through the CECRA program should be available on a sliding scale, recognizing the tenuous financial circumstances that many commercial tenants will continue to face while restrictions remain in place. The threshold should be adjusted so that businesses remain eligible as they reopen and recover.
- Eligibility requirements should be expanded to be more inclusive of all foodservice business models.
- Tenants should be able to apply for the CECRA program and an application from an eligible tenant should make a landlord’s participation compulsory.
- Commercial tenants should be protected against evictions until solutions are in place that work for all parties. The federal government should work with the provinces to ensure moratoriums on evictions remain in place to protect commercial tenants not benefiting from the CECRA program for as long as restrictions continue.
3) Help with cash flow and rising debt levels
Existing measures need to be expanded and new solutions are needed to ensure restaurants have enough working capital to remain viable for as long as restrictions remain in place:
- Businesses should be able to access more than $40,000 in interest-free loans through the Canada Emergency Business Account (CEBA) program and at least 75 per cent should be forgivable.
Feeding Canada’s recovery
Working together with Restaurants Canada, all levels of government can help foodservice businesses continue playing an integral part of the social and economic fabric of communities across the country. Learn more at feedingtherecovery.ca.