A new survey from Restaurants Canada has revealed most foodservice businesses in Ontario might not have enough cash flow to successfully reopen their doors.
As the province moves forward with lifting emergency measures, restaurants will need more support remaining viable until they are on a path to full recovery.
About seven out of 10 survey respondents said they are either very or extremely worried their business will not have enough liquidity to pay vendors, rent, and other expenses over the next three months.
Restaurants Canada is calling for solutions for restaurant owners to support their reopenings.
“The resiliency of our industry will not 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 solutions to help these mostly small and medium-sized businesses stay afloat as they ramp up their operations.”
Before the start of the COVID-19 pandemic, Ontario’s $37 billion foodservice industry represented four per cent of the province’s GDP and was Ontario’s fourth-largest private sector employer. If conditions do not improve, foodservice sales could be down by as much as $7 billion for the second quarter of 2020 and the industry might not be able to recover the more than 300,000 jobs lost due to COVID-19.
Restaurants Canada is urging further action in the following areas where foodservice businesses continue to need support to have a fighting chance at survival:
Commercial tenant protections and rent relief
While the Ontario-Canada Emergency Commercial Rent Assistance (OCECRA) program responds to one of the greatest challenges for restaurants, many will be unable to secure any protection or relief through this mechanism. A broader rent relief program is needed to capture businesses which have experienced a significant decline in sales but do not meet the current qualifying criteria. Commercial tenant protections are needed for those not benefiting from this program to relieve pressure while all stakeholders come to the table to develop immediate and long-term solutions. Some provinces, like New Brunswick and Nova Scotia, have already taken action on this issue. Restaurants Canada believes Ontario should place a temporary moratorium on evictions and distress actions.
Help with cash flow and rising debt levels
Most restaurants are small and medium-sized businesses which were already operating with razor thin profit margins before COVID-19. With little-to-no sales revenue coming, many have already depleted their reserve funds or will soon. Existing measures may need to be expanded and new solutions are required to ensure restaurants will have enough working capital to reopen their doors. Due to the perishable nature of their inventories, many suffered unrecoverable losses and also need support to restock as they reopen.
Assistance with labour costs
While the federal government’s 75 per cent wage subsidy is helping some restaurants keep staff on payroll, those now preparing to reopen are concerned about being able to access this support in the months ahead. Restaurants Canada said further assistance in this area from the Ontario government is needed, along with an extension of the Canada Emergency Wage Subsidy (CEWS) program by a few months.