Restaurants make plea for government support as over half of eateries face bankruptcy in next three months

OTTAWA — Restaurant owners issued a stark warning to federal policymakers on Wednesday, saying that more than half of all Canadian eateries could go out of business in the next three months as the pandemic continues to discourage people from dining out.

Restaurants Canada, a lobby group representing 30,000 firms, has been meeting federal officials and calling for a range of supports for the food service sector, which has been clobbered by COVID-19 lockdowns.

The lobby group is calling for an extension of the Canada Emergency Wage Subsidy (CEWS) beyond the end of 2020, and a streamlined rent relief program for business owners, among other things. It is also calling on the Trudeau government to shift its tone when addressing the Canadian public, by encouraging people to return to their normal lives rather than focusing solely on health risks.

The industry will be under particular stress in coming months as colder temperatures begin sweeping across the country, said David Lefebvre, vice-president of Restaurants Canada.

“Patios soon won’t be available, because it’s going to be winter in Canada,” he said. “That’s going to reduce capacity a lot.”

The pleas for support come as the government under Prime Minister Justin Trudeau has stuck to a safety-oriented message, while giving far less oxygen to looming concerns around economic recovery. The U.K. government, by comparison, recently unveiled a program that pays 50 per cent of Britons’ restaurant tabs as a way to incentivize dining out.

The U.K. treasury subsidized over 35 million bar and restaurant tabs in the first half of August alone, recent data show.

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Canadians have slowly begun to return to restaurants as social distancing measures are gradually eased across the country. But businesses are still operating at well below capacity.

A survey released on Thursday found that 29 per cent of food service businesses cannot operate under social distancing guidelines, while another 31 per cent will only be able to keep their doors open for another 90 days at most. “In other words, up to 60 per cent of the industry could fail within three months,” the survey said.

“If we don’t ask for support, or if there’s a second wave, there’s going to be massive bankruptcies across the industry,” Lefebvre said in an interview.

The survey was supported by the Canadian Chamber of Commerce, Restaurants Canada and by large food and drink companies including Boston Pizza and Molson Coors Beverage Company.

The restaurant industry says it has shown some signs of improvement in recent months, which could easily be diminished once outdoor dining is shut down for the summer. Employment in the Canadian food service industry fell to as low as 400,000 people in the middle of pandemic, down from 1.2 million before the outbreak. That figure is currently around 800,000 people, according to data from Restaurants Canada.

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“We need to act now,” said Perrin Beatty, head of the Canadian Chamber of Commerce, in a statement. “Across Canada, our restaurants are where we meet for business or pleasure, where we got our first job and where our families spend a night out. Simply put, our restaurants are cornerstones in our communities.”

Uptake under the Liberal government’s rent-relief program, which is administered by the Canada Mortgage and Housing Corporation, has been lower than initially expected. Lefebvre said the application process for the relief was overly complicated, and effectively ignored many small businesses like restaurants, because it targeted landlords rather than business owners themselves.

His lobby group is also concerned over the decision by policymakers to wind down the federal wage subsidy program by the end of 2020, saying it could cut off a crucial supply of capital to firms. Plans to wind down the Canada Emergency Response Benefit (CERB) could also discourage more people from dining out, industry representatives say.

“When we go to restaurants, we don’t do it with the rent money, we do it with the extra money in our pockets,”  Lefebvre said. “So as people have less available income to do that, or less extra money to do to go to restaurants, of course that’s going to hurt.”

• Email: jsnyder@postmedia.com | Twitter: jesse_snyder