With at least 12 downtown St. John's businesses closing, these experts weigh in on the causes and solutions
While many restaurants have shut their doors permanently, a high vacancy rate shows there's a bigger problem
While downtown St. John's has been popular for its culinary scene — attracting world renowned chefs like Anthony Bourdain for a visit — a walk down Water Street lately reveals one vacant storefront after another.
The sight has prompted industry experts to call for swift action to revive the area, which saw at least a dozen businesses — half of them on Water Street — shut their doors forever, or announce they soon will, within the last six months.
"To see businesses at this volume close their doors is very concerning," said AnnMarie Boudreau, CEO of the St. John's Board of Trade.
While retail stores and clubs have felt the squeeze, the closures have been mostly restaurants. It's a trend that can also be seen outside Newfoundland and Labrador.
According to Restaurants Canada, 45 per cent more restaurants across the country went bankrupt between January and August last year than in the same period in 2023.
Despite not one, but two locations in the city, Piatto Pizzeria feels the strain, too.
Rising food prices, inflation and increased shipping. Founder and CEO Brian Vallis said those are only some of the factors putting pressure on his restaurants.
"A bag of flour went from $50 a bag to $150 a bag. The price of our cheeses all doubled, our meats doubled," said Vallis.
"Everything is gone up. So, you've got less sales, you've got more expenses. So, you've got a poor bottom line. Most restaurants have lost money or just broken even for the last two or three years."
That personal observation is supported by a Restaurants Canada release from Jan. 17, which said 53 per cent of restaurants nationally are operating at a loss or barely breaking even.
Furthermore, according to Canada's Food Price Report, which was released on Dec. 5, food prices in the province rose by 3.8 per cent in 2024 and are predicted to experience another increase above the national average this year.
This increase in cost comes at a time when businesses are still recovering from the COVID-19 pandemic. While restrictions have long been lifted, Vallis said the long-term impacts of lockdowns and the loss of three summer seasons continue to be felt.
Consumer behaviour also changed during that period with online shopping seeing an uptick says Tom Cooper, a professor in strategic management at Memorial University's faculty of business administration.
In combination with the impacts of inflation on consumers' wallets, he said, some of those who have been driving business downtown have stayed away.
"Twenty-something and 30-something-year-olds are having to deal with the very hot housing market," said Cooper.
"You're trying to save money for a down payment or you're trying to save money because you need to pay your rent. And so, what do you decide to not spend your money on? On restaurants, on new clothing."
Although businesses across the Atlantic provinces are feeling the impact of the economic climate, numbers seem to indicate that downtown St. John's is hit harder. According to data provided by real estate firm Turner Drake & Partners, as of June 2024, the office space vacancy rate downtown was at 31 per cent, compared to 19.9 per cent in Halifax and 15.5 per cent in Fredericton.
While the empty space in the downtown core is noticed at city hall, a vacancy tax isn't an approach Mayor Danny Breen wants to take.
Instead, Breen says he's banking on more investments — especially in residential developments. While he wouldn't go into details, he said several projects are currently in the planning stages.
"We have a number of buildings that are vacant, which is not something that we want to see, but you do see in cities from time to time.… Once more people are living there, that brings about the amenities and gives a better market for businesses to operate in," said Breen.
"I think that's the catalyst we'll need to bring about our resurgence in the downtown."
Cooper agrees that diversification of spaces to embrace residents and a wide variety of organizations — such as Choices for Youth or a recreation centre — can help attract not just tourists in the summer months, but locals all year round.
And, he said, cities like Halifax have managed to provide spaces for residents "just to hang out" instead of consuming, which in St. John's is only possible at Harbourside Park or during the pedestrian mall in the summer.
Back at Piatto, Vallis also wants to see financial support for businesses, whether as an extended HST break on the federal level, a provincial loan program or a municipal tax break.
He also calls for measures to increase the safety of the area, and its cleanliness.
"If you walk down Water Street and Duckworth Street, you're going to see all kinds of buildings closed. They're in a state of disrepair. There's people living in the doorways and there's a lot of pan handlers," said Vallis.
"It's a deterrent for people coming down. They don't feel safe. They don't feel welcome."
Meanwhile, Breen said the city is working on addressing those concerns, but isn't ready to share details.
Yet, they all agree that there need to be discussions between stakeholders to find the best approach to solutions.
WATCH | These business owners say it's not too late to reverse the trend:
"There are plenty of cities and capital cities that have gone through periods where things just go into a slump. But with intentional decision-making, and with really careful and strategic decisions, you can stop it. And communities have proven that they can reverse the trends and that's what we need to do right now," said Boudreau.
"Our community will look vastly different 12 months from now if we don't provide some sort of support."
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