Canadian restaurants

8 out of 10 Canadian restaurants still barely surviving

The latest survey from Restaurants Canada has found that eight out of 10 surviving Canadian restaurants are still barely scraping by, nearly 18 months into the pandemic.

According to the latest data drawn from the study conducted in July:

  • Over half (55 per cent) of restaurant operators said they are still operating at a loss
  • Another 20 per cent reported they are just breaking even
  • An additional nine per cent are making a pre-tax profit of less than 2 per cent

In addition:

  • Eight out of 10 foodservice operators have taken on new debt over the course of the past 17+ months of the ongoing COVID-19 crisis
  • A quarter of independent restaurants that are struggling with such pandemic debt do not expect to recover unless current conditions change
  • More than a quarter (26 per cent) of single-unit restaurant operators who took on new debt during the pandemic also said their business will not 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.”

More sector-specific support needed

In response to the alarming figures, 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.

“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,” said the organization.

“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.”

Industry recommendations

Restaurants Canada noted that by working with the industry, the next federal government has a chance to help foodservice businesses continue to play an integral part of the social and economic fabric of Canada and its communities.

It made several recommendations for key supports for restaurants and foodservice:

Restaurant survival supports

  • Foodservice should be exempt from the scheduled phase-out of the rent and wage subsidies, and restaurants should receive an extension of these programs until at least April 2022.
  • Restaurants eligiible for the wage subsidy should 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.
  • All government-backed loans should be partially forgiven, not just the Canada Emergency Business Account (CEBA).
  • Tax credits shoul be offered to offset the exorbitant costs incurred from COVID-19 health and safety expenditures.

Restaurant relaunch measures

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

RELATED: The hiring dilemma: Luring restaurant workers amid pandemic damage

Labour development

  • Support should be given for the expansion of impactful labour pilot programs.
  • There should be an increase in federal funding to ensure efficient and effective processing of immigration applications.
  • There should be an extension of work visas for a full year and suspension of fees until 2022.
  • There should be an addition of a foodservice stream into the Temporary Foreign Worker Program (TFWP) to address seasonal and long-term labour shortages, among other things.

A “do no harm” approach to taxes & red tape

Restaurants Canada urges that to create the best possible conditions for recovery after 17+ months of either losing money or barely breaking even, the government needs 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.