Restaurants need sector-specific support to survive devastating pandemic debt

Published August 19, 2021

A quarter of independent restaurants struggling with pandemic debt do not expect to recover unless current conditions change.

TORONTO — Restaurants Canada is calling on all parties seeking to form the next federal government to help hard-hit foodservice businesses recover from their pandemic debt so they can continue feeding Canada’s recovery.

According to the latest Restaurants Canada survey conducted in July:

  • 8 out of 10 foodservice business operators said they’ve taken on new debt over the course of the past 17+ months of the ongoing COVID-19 crisis.
  • More than a quarter (26%) of single-unit restaurant operators who said they took on new debt during the pandemic said their business will not be able to recover unless current conditions change.

“Our member surveys throughout the pandemic have consistently revealed that foodservice businesses will need at least a year to recover from this crisis,” said Restaurants Canada President and CEO Todd Barclay. “Canada’s hard-hit restaurant operators deserve a reopening plan that will ensure they can preserve their livelihoods, continue employing 1.2 million Canadians and keep contributing to vibrant communities across the country.”

Sector-specific support needed to revive hard-hit restaurant industry

Canada’s restaurant operators are innovative and resilient, but many are still at risk of closing down from crushing debt that they are continuing to incur due to the ongoing pandemic.

Eight out of 10 foodservice business operators responding to the latest Restaurants Canada survey said they are continuing to lose money or are barely scraping by:

  • 55% said they are still operating at a loss
  • 20% said they are just breaking even
  • 9% said they are making a pre-tax profit of less than 2%

This reflects the reality that the majority of Canadian foodservice establishments are still operating at reduced capacity due to restrictions still in place within most jurisdictions across the country. In addition to these ongoing limitations, consumer confidence in restaurant dining is still rebounding after a year and a half of “stay at home” messages from political leaders and health officials.

Working together with Restaurants Canada, the next federal government can help foodservice businesses continue playing an integral part of the social and economic fabric of our communities. Below are recommendations for measures in key areas where restaurants continue to require government support to successfully transition from survival to revival and keep feeding Canada’s COVID-19 recovery.

Restaurant Survival Support

As Canada’s hardest-hit industry, restaurants continue to need sector-specific support to survive the ongoing pandemic, 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. 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 the exorbitant costs incurred from COVID-19 health and safety expenditures.

Restaurant Relaunch Measures

To rebuild public confidence in dining out and help the hard-hit foodservice sector return to pre-pandemic levels of operations, restaurants need the following forms of support from the federal government:

  • An expansion of the current “meals and expenses” business tax credit from 50% to its original 100%.
  • A national dining rebate program allowing Canadians to save 50% when they eat at restaurants, as well as a culinary tourism incentive encouraging Canadians to support local foodservice businesses while travelling across the country.

Labour Development

To help the restaurant sector overcome pre-existing labour shortages exacerbated by the COVID-19 pandemic, a National Foodservice Labour Development Strategy is needed, including measures such as:

  • Support for the expansion of impactful labour pilot programs, such as the Atlantic Immigration Program and Alberta Foodservice Labour Connections.
  • An increase in federal funding to ensure efficient and effective processing of immigration applications by reducing wait times, administrative burdens, and increasing information-sharing between sponsors.
  • An extension of work visas for a full year and suspension of fees until 2022.
  • The addition of a foodservice stream into the Temporary Foreign Worker Program (TFWP) to address seasonal and long-term labour shortages, as well as a redesign of the national occupational classification structure to broaden the categories of positions that foodservice employers can use the TFWP to help fill, as well as a lower administrative burden on small businesses who use the TFWP.

A “Do No Harm” Approach to Taxes & Red Tape

To create the best possible conditions for recovery after 17+ months of either losing money or barely breaking even, foodservice operations need government to take a “do no harm” approach with taxes and regulations, including:

  • A whole-of-society approach to single-use items, built on evidence-based policies and consistent standards across jurisdictions.
  • A freeze on any further excise duty increases on beer, wine or spirits.
  • A cap on credit/debit card interchange fees and the removal of merchant fees from the tax portion of restaurant bills.
  • Indexation of the passive investment income threshold to support restaurateurs making investments to safeguard or grow their operations.
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 $95 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 since lost hundreds of thousands of jobs and billions in sales due to the impacts of COVID-19.

Marlee Wasser

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