A survey by Restaurants Canada found that the COVID-19 crisis has cost the country an estimated 800,000 foodservice jobs since March 1, including 13,700 in New Brunswick and 24,500 in Nova Scotia.
The survey found many of those jobs may not return as nine percent of restaurants in the country won’t reopen, and another 18 percent could close within a month if the situation doesn’t improve.
“Basically, we’ve seen between 60 and 70 percent drop in employment, and 80 percent drop in sales across the industry,” said Luc Erjavec, Atlantic Canada VP for Restaurants Canada.
“A lot of our industry is completely shut down, doing zero sales, and that has really challenged the industry in terms of how do we keep our businesses alive and get through the other side of this.”
The survey aims to show the scale of the problem as restaurants are struggling to pay rent and other bills due this month.
With responses from members representing 13,300 locations in the country – Canada has approximately 97,500 foodservice establishments – Restaurants Canada found that four of five restaurants have laid off staff since March 1. Some 70 percent of operators will also make further cuts to staff hours or lay off more employees if conditions don’t improve.
The national foodservice association said these are the worst numbers it has seen in its 75 years of existence.
The food-service industry is valued at $1.6 billion and represents 4 percent of GDP in New Brunswick. In Nova Scotia, the $2.1 billion sector contributes 4.6 percent of the GDP.
If conditions don’t improve, Restaurants Canada estimates New Brunswick’s foodservice sales will have dropped by more than $320 million in Q2 2020, and by $440 million in Nova Scotia.
Erjavec says the association commends the work that the governments of Nova Scotia, New Brunswick and Ottawa have done to date. But “there’s a lot more to be done if we’re going to survive and come out the other side,” he said.
With cash flow and working capital key for restaurants right now, Erjavec says restaurants, landlords, banks, and governments at all levels need to work together to come up with a relief package for rent, mortgages, and commercial and business taxes, among others.
Deferrals of payments are not enough, as restaurants traditionally already have thin margins, and the impact of the crisis will slow down business even if they reopen.
“We have bills to pay and zero sales in a lot of cases to pay for it,” he said. “How do you expect a business to pay commercial business tax, when there’s no business? It’s not simply a matter of saying you don’t have to pay this month, you can pay the next month. The same with your rent. How are you ever going to get out of this mountain of debt when you’ve just been devastated and business will be slow?”
Erjavec says some tenant protection policies have helped in New Brunswick and Nova Scotia. But he’s also heard from many in his membership that banks have not been as cooperative or flexible with mortgages and providing access to interest-free loans.
“Maybe all of us have to put a little water in our line. It can’t only work for banks, it can’t only work for landlords, it can’t only work for restaurants. It has to be a concerted effort because this is the only way we’re going to get to the other side,” he said.
“Even with takeout and delivery – the numbers are only doing about 20 percent of the sales – it’s a vital 20 percent because we’re providing for truck drivers who are on the road supplying goods we need, we’re providing food to first responders, to healthcare workers, taking some of the pressure off of the supply chains and the grocery stores.”
Erjavec says the nine percent of Canadian restaurants that have closed permanently probably won’t reopen, but Restaurants Canada is working to help those who are temporarily closed to get back on their feet.
Although the federal wage subsidy is a good start, restaurants that have laid off employees aren’t eligible. So access to capital to allow them to reopen and rehire people will help restaurants get the gears running again, he said.
Nova Scotia recently announced the Small Business Impact Grant, which offers 15 per cent of an organization’s revenue from sales up to a maximum of $5,000, and P.E.I. launched a Business Adaptation Advice Program, which offers up to $2,500 for organizations to adapt or recover from COVID-19 impact.
Erjavec said grants like that can help businesses who don’t have the money to move online or set up delivery service.
