On May 20, Restaurants Canada was invited to present testimony to the House of Commons Standing Committee on Finance (FINA), which was meeting to discuss the implementation of the federal government’s new budget.
Restaurants Canada Vice President Olivier Bourbeau provided an update on the devastating impacts that the pandemic has had on the Canadian foodservice industry and our recommendations for a sector-specific Restaurant Survival Support Package, including:
- An exemption from the scheduled phase-out of the rent and wage subsidies for the highly affected foodservice sector, and an extension of these vital programs for restaurants until at least April 2022. This will be necessary, as Restaurants Canada survey data has consistently revealed that restaurant operators expect they’ll need at least a year to return to profitability once the COVID-19 pandemic subsides.
- The option for any restaurants eligible for the wage subsidy to be able to apply for added funding through the Canada Recovery Hiring Program so that they can hire new workers in addition to keeping the ones they already have on payroll.
- Partial forgiveness for all government-backed loans and an extension of application deadlines for existing programs. Currently loan forgiveness is only available through the Canada Emergency Business Account (CEBA). Restaurants Canada would like to see this as well for the Highly Affected Sectors Credit Availability Program (HASCAP) and any other loan program that the government introduces to help businesses recover from the pandemic.
- Tax credits to defray costs of COVID-19 health and safety expenditures.
Below are highlights from the presentation. The full presentation and Q&A can be viewed online via ParlVU.
Restaurants are key to feeding Canada’s COVID-19 recovery
Restaurants Canada estimates that at least 10% of restaurant operations across the country have had to permanently close down due to the ongoing economic and public health crisis. That’s about 10,000 establishments that are now gone for good.
The measures contained in the long-awaited budget unveiled in April 2021 are not only of vital importance to the survival of the rest of the hardest-hit foodservice sector, but they’re also key to ensuring that restaurants have what they need to continue feeding Canada’s economic recovery.
That’s because restaurants and the many small and medium-sized businesses that make up the Canadian foodservice sector are a critical pillar of our culture, economy and local communities.
Something that most Canadians don’t realize is that at least 95 cents of every dollar we spend at a restaurant usually goes directly back into our communities. That’s because even during the best of times, a typical Canadian restaurant has a pre-tax profit margin of less than 5%.
No other sector keeps so little in profit and returns so much to our economy: 95% of all restaurant revenue typically goes toward local jobs, purchases from Canadian farmers, food and beverage producers and other foodservice industry suppliers, contributions to charity and more.
Half of restaurants face risk of closure if subsidies are scaled back too soon
Restaurants aren’t charities; they need hope that they can make at least the slimmest of profit margins to justify staying in business.
Unfortunately, the COVID-19 pandemic has stretched their resiliency to the limits.
According to Restaurants Canada survey data:
- 8 out of 10 foodservice businesses have been operating at a loss or barely breaking even throughout the entire pandemic.
- Nearly half of all restaurant operations have consistently been losing money for more than a year.
This was the case even after dining rooms reopened across all jurisdictions last summer, and even once the federal rent and wage subsidies, and other forms of government support, became available.
Essentially, these emergency aid measures have been providing our hardest-hit industry with vitally needed life support.
Even with Canadians now looking forward to hopefully enjoying a one-dose summer, we know this won’t mean restaurants can operate at 100% capacity. We expect physical distancing requirements will remain in place throughout the summer at least, and maybe even into the fall and winter.
Restaurant operators have been counting on the rent and wage subsidies to be the bridge they need to stay alive until dining restrictions are lifted and they can truly start to recover without the help of emergency support.
If the budget is implemented without any changes, the federal government will essentially be pulling up the support ramp right before relaunch and putting half of restaurants at risk of being left behind.
Restaurants account for most of Canada’s pandemic employment gap
Losing half of all restaurants would not only be a huge loss for main streets across the country, it would also leave nearly half a million Canadians without work.
According to the April Labour Force Survey from Statistics Canada, more than two thirds of the 500,000+ jobs that were lost during the pandemic and are still missing from the Canadian economy are from the foodservice sector.
At a time when all other industries have recovered an average of 90% of their pandemic job losses, the restaurant sector still hasn’t recovered half of the jobs we’ve lost: As of last count, there were more than 400,000 fewer jobs in the Canadian restaurant industry than there were in February 2020. This includes more than 80,000 workers who are still technically employed but not currently working any hours.
With a number of provinces prolonging or increasing dining restrictions as they continue to contend with the third wave of the pandemic, further foodservice job losses will likely be reported in May.
Restaurants are key to bringing these jobs back. But first they need to survive.
Continuing to raise the voice of foodservice
Restaurants Canada will continue to discuss our recommendations for a Restaurant Survival Support Package with elected officials and key government policymakers engaged in our Restaurant Revival Working Group.
We welcome your feedback. Please do not hesitate to reach out to Olivier Bourbeau, Restaurants Canada Vice President, Federal and Quebec at: OBourbeau@restaurantscanada.org