Many restaurants won’t recover from COVID-19 without rent relief

Published April 23, 2020

A new Restaurants Canada survey forecasts widespread closures in three months if long-term solutions aren’t reached

TORONTO — A new survey from Restaurants Canada has revealed that nearly all 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 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 commends the federal government for leading a coordinated effort with the provinces and territories toward the creation of a Canada Emergency Commercial Rent Assistance program,” said David Lefebvre, Restaurants Canada Vice President, Federal and Quebec. “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 economy 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, Canada’s foodservice sector was a $93 billion industry, directly employing 1.2 million people, providing Canada’s number one source of first jobs and serving 22 million customers across the country every day. The industry has now lost 800,000 jobs and is on track to lose nearly $20 billion in sales over the second quarter of 2020 due to the impacts of COVID-19.

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For more information, contact:

Marie-Christine Garon
Director
NATIONAL Public Relations
C: 514-409-0031
mcgaron@national.ca

Chloe Mills
Consultant
NATIONAL Public Relations
C: 416-459-3060
CMills@national.ca

Marlee Wasser

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