While Ontario is starting to give some businesses the green light to reopen, a new survey has revealed that most foodservice businesses in the province might not have enough cash flow to successfully reopen their doors to diners post-COVID.
Restaurants Canada, which represents the national foodservice industry, is now calling on the provincial government for solutions to help these businesses make it through the pandemic and to support their reopening.
The survey, which was conducted between May 1 and May 5, found that approximately 70% of respondents said they are either “very or extremely worried” that their business won’t have enough liquidity to pay vendors, rent, and other expenses over the next three months.
While the Canada Emergency Commercial Rent Assistance (CECRA) program might provide some restaurants with relief, rent obligations continue to be a challenge for many.
According to the survey, at least one out of five independent restaurant operators is dealing with a landlord who is not willing to provide rent relief, either through the CECRA program or some other arrangement. At the same time, 14% of independent restaurants haven’t been able to pay rent for April and nearly 20% aren’t able to pay rent for May, despite not having an agreement from their landlord to postpone those payments.
“The resiliency of our industry won’t be enough to ensure Ontario’s 38,000 restaurants remain viable in the face of insufficient cash flow and insurmountable debt,” said James Rilett, Restaurants Canada Vice President, Central Canada. “The province needs to come to the table with a package of solutions to help these mostly small and medium-sized businesses stay afloat as they ramp up their operations.”
Restaurants Canada is now turning to the provincial government for assistance and calling for a broader rent relief program to capture businesses that have experienced a significant decline in sales but do not meet the current qualifying threshold for CECRA. The organization is also asking for help with cash flow, rising debt levels, and assistance with labour costs.
Before the start of the COVID-19 pandemic, Ontario’s $37 billion foodservice industry represented 4% of the province’s GDP and was the province’s fourth-largest private-sector employer, according to Restaurants Canada.
However, if conditions do not improve, the organization says it expects the province’s foodservice sales to drop by as much as $7 billion for the second quarter of 2020. Subsequently, Restaurants Canada says it believes the industry might not be able to recover the more than 300,000 jobs it’s lost due to COVID-19.
Methodology: Restaurants Canada received a total of 890 completed surveys from foodservice operators across Canada, representing 11,965 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.