A new Restaurants Canada survey forecasts widespread closures in three months if long-term solutions aren’t reached
ST. JOHN’S — A new survey from Restaurants Canada has revealed that nearly all of Newfoundland and Labrador’s foodservice businesses are concerned about their current debt levels, and many won’t survive the impacts of COVID-19 without longer-term solutions.
While all levels of government have made extraordinary efforts to respond with emergency relief measures, restaurants are going to need more support as part of the province’s transition to recovery.
Survey warns of widespread closures in the face of insurmountable debt
Seventy-five per cent of survey respondents said they are either very or extremely concerned about their current level of debt.
If conditions don’t improve over the next three months:
- One out of every two independent restaurants does not expect to survive.
- Most multi-unit foodservice businesses will have to permanently shut down at least one of their locations.
At least three quarters of respondents identified rent as a main source of debt for their operations, reinforcing the urgent need for relief in this area.
“Even the most experienced restaurateurs are struggling to meet their rent obligations, through no fault of their own, due to the unprecedented circumstances we’re all now facing,” said Shanna Munro, Restaurants Canada President and CEO. “COVID-19 has taken a devastating toll on small businesses, with restaurants being among the hardest hit. Even once restrictions are eased, they’re still going to need help to avoid closing down due to crushing levels of debt.”
Recommendations from Restaurants Canada
“Restaurants Canada is encouraged to see the Government of Newfoundland and Labrador working with counterparts at the federal level, and with the other provinces and territories, toward the creation of a Canada Emergency Commercial Rent Assistance program,” said Luc Erjavec, Restaurants Canada Vice President, Atlantic Canada. “We look forward to ensuring the needs of foodservice businesses are addressed as part of this program so that they will be able to remain viable as the province recovers from COVID-19.”
Restaurants Canada recommends the program include the following critical components:
- An immediate moratorium on evictions and lock-outs for commercial tenants. This would relieve pressure while stakeholders continue to develop solutions for the long term. Many restaurants haven’t been able to pay rent this month and are now at risk.
- Rent assistance at a percentage in line with decreased revenue. Deferrals and loans can help in the short term, but in the long term will contribute to more permanent closures due to insurmountable debt if not combined with mechanisms for relief.
- Measures that continue while the economy is still in recovery. Foodservice businesses will need a sustained period of support to ramp back up while consumer spending rebounds. Restaurants Canada recommends continuing rent relief measures until businesses have returned to a fixed percentage of pre-COVID-19 revenues.
About the Restaurants Canada survey
Conclusions cited above are based on responses to a Restaurants Canada survey conducted between April 15 and April 21, 2020. Restaurants Canada received a total of 914 completed surveys from foodservice operators across Canada, representing 11,856 locations (as many respondents belong to multi-unit businesses). Canada’s commercial foodservice industry is made up of 97,500 establishments, including full-service restaurants, quick-service restaurants, caterers and drinking places.
About Restaurants Canada
Restaurants Canada is a national, not-for-profit association advancing the potential of Canada’s diverse and dynamic foodservice industry through member programs, research, advocacy, resources and events. Before the start of the COVID-19 pandemic, Newfoundland and Labrador’s foodservice sector was a $1.1 billion industry, directly employing nearly 17,000 people, providing the province’s number one source of first jobs and serving tens of thousands of customers every day. Newfoundland and Labrador’s foodservice industry has now lost more than 10,000 jobs and is on track to lose at least $200 million in sales over the second quarter of 2020 due to the impacts of COVID-19.
For more information, contact:
Vice President, Atlantic Canada
Toll-free: 1-800-387-5649 ext. 5000
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