Six out of 10 restaurants could close their doors permanently by November without some financial relief, says a new study.
The Canadian Survey on Business Conditions reports that 29 per cent of accommodation and food service businesses cannot operate at all with the social distancing measures in effect.
Another 31 per cent give themselves 90 more days at present capacity levels before they have to toss in the towel, according to data pulled together by Statistics Canada with support from the Canadian Chamber of Commerce.
Red Deer has already seen some hospitality and restaurant casualties in recent months. The Black Knight Inn and its Remington’s Grill and JB’s Lounge have gone into receivership. Tony Roma’s and the Tim Hortons just south of Bower Place mall have also closed.
Even before the pandemic, some restaurants were struggling. Hudsons in Stantec Executive Place tower closed last December.
While diners have begun to return to restaurants, they are a long way from where they were pre-pandemic.
To highlight the industry’s challenges, the Canadian Chamber of Commerce, along with 15 food service businesses representing 60 brands, including well-known restaurants such as Boston Pizza, launched the Our Restaurants campaign.
Restaurants Canada has also joined the effort and released its own report that uses the most recent data to paint a grim picture of the state of the industry.
Restaurants Canada is a national, not-for-profit association representing the foodservice industry.
Food services generated $93 billion in sales in 2019 and was on track to clear $100 billion this year. The pandemic changed that and it is estimated the sector will lose between $22 billion and $45 billion in sales this year.
In Alberta, receipts from full- and quick-service restaurants, caterers and drinking places were down 36 per cent in March, compared with the year prior. April sales were down 58 per cent year over year, May was down 42 per cent and June was down 26 per cent, according to Statistics Canada.
Restaurants Canada’s James Rilett said it is hoped, especially if government steps up with support, that the 60 per cent closure scenario never comes to pass.
“Obviously, that’s the worst-case scenario,” said Rilett.
There are steps the federal government can take to ease the crisis, such as extending the Canada Emergency Wage Subsidy past the end of the year.
“That’s the program that’s allowing us to keep people employed right now,” said Rilett.
Extending the Canada Emergency Response Benefit into 2021, rather than winding it up at the end of the year as planned, would also help restaurants by leaving Canadians with more money in their pockets, he said.
Streamlining and tweaking a rent-relief program for business owners would also be beneficial. The program that was rolled out is red tape-heavy and was aimed at landlords, not smaller businesses such as restaurants, and has not had much uptake.
Revamping it to help smaller businesses directly would be more useful, says Restaurants Canada.
Rilett said the industry has been working with tourism associations and would like to see the federal or provincial governments consider subsidies, along the lines of a program in the United Kingdom that picks up half of diners’ restaurant tabs to encourage more people to dine out.
The rebate comes off the dinner bill and the restaurant applies to the government to get the money back.
New Brunswick also rolled out a program to encourage staycations that give residents a 20 per cent rebate on food and drink, as well as accommodations, activities and travel expenses, such as car rentals or parking fees.
“What we want is something just to encourage people to get out that first time to a local pub or restaurant and enjoy their hospitality again,” he said.
Red Deer & District Chamber of Commerce president Dustin Snider said the wage subsidy has helped keep staff employed.
“With regards to the other programs, I honestly think it’s too soon to tell if we can operate profitably in the fall with everyone going back to school,” said Snider, who is general manager of the local Earl’s Restaurant.
“We will maintain our strict sanitization practices in hopes that people feel comfortable visiting our restaurant.
“I can’t predict what will happen with people’s disposable income, but logically, there will be less to spend on dining out, considering the state of Alberta’s economy.”
Restaurants have been innovating in response to the pandemic, says Restaurants Canada. Many now have “ghost kitchens” dedicated to takeout and delivery orders.
About half have adopted contactless options for payment and curbside pick up.
Thousands of restaurants developed meal kits and one in five plan to continue to offer them post-pandemic.