Canadian restaurants struggle to survive despite gradual re-openings

For a man with three closed restaurants, John Sinopoli is a busy guy. Sinopoli is one of the owners of Toronto's Ascari Hospitality Group, which runs the popular eatery Ascari Enoteca, along with two other businesses: a bar and a catering company.

These days, he's making meal kits, delivering boxes of high-end groceries and lobbying for an industry that he believes is coming close to losing many of its independent operators.

By early April, 10 per cent of Canada's restaurants had closed permanently because of the COVID-19 pandemic, according to the industry group Restaurants Canada.

It's Sinopoli's prediction that many more could follow suit — at least half of the independently-owned restaurants in the country.

His view was echoed in a voluntary survey released in late April by Restaurants Canada, where 50 per cent of independent restaurants said they'd permanently close within three months under current conditions.

Sinopoli is one of the forces behind the recently created lobby group SaveHospitality.ca. Its goal is to focus government attention on what is happening to smaller restaurants owned by families or chefs.

Job losses

The group is calling for forgivable loans that could add up to billions of dollars, at around 10 per cent of a company's annual sales from last year.

The group is also asking for regulatory changes such as lowering taxes on alcoholic spirits purchased by retailers and requiring credit card companies to lower interest rates on accounts held by hospitality businesses.

"Why is the restaurant and hospitality industry not your number one concern considering the massive amount of job loss," said Sinopoli.

That is also what's on the mind of Vancouver chef Robert Belcham. Two of his restaurants and a bar are currently closed because of the pandemic. It gives Belcham a lot of time to think.

"The state of my industry is completely ... broken," said Belcham, who added that the business model for small restaurants was precarious in North America even before the coronavirus hit.

"We've painted ourselves into a corner of pushing toward the bottom."

Belcham said independent restaurateurs like himself were in a "race to the bottom" before the pandemic, undercutting each other, dropping menu prices for customer loyalty while costs continued to rise.

Profits became razor thin — five per cent on average, he told CBC Radio's The Cost of Living.

Then the pandemic hit.

Hard to make a profit under restrictions

In Alberta, the provincial government gave the green light for restaurants to start reopening this week at 50 per cent capacity. Some other provinces have signalled they'll follow suit.

But for owners such as Belcham, it was hard enough making a profit when his restaurant was full. According to Belcham, it would cost $60,000 just to reopen his restaurant Campagnolo and he won't do it until he can fill the place.

Besides, Belcham said he isn't sure his old patrons would return.

"Would you feel safe sitting in a room with strangers, being served by someone wearing a mask?  I'm not sure you would."

Belcham said if he were to spend the money to rehire staff, stock his kitchen and accommodate physical distancing rules — and then a second wave of infections hit, he'd never survive.

Subsidies available 

There is money available for people in the hospitality industry hit hard by the pandemic, through measures put in place by the federal government that broadly target many sectors of the economy.

Both restaurant owners and laid off workers could be eligible for the federal Canada emergency response benefit (CERB) program.

There is also the Canada emergency wage subsidy, or CEWS program, for restaurants that continue to operate. 

As well, many restaurants may qualify for small business loans of $40,000, of which 25 per cent could be forgiven if the loan is repaid by the end of 2022.

The federal government has also extended its 75 per cent wage subsidy until the end of August. Companies that saw their revenues drop by 15 per cent in March or 30 per cent in April and May are eligible for the program, though Prime Minister Justin Trudeau hinted changes could be coming to that threshold in a press conference on Friday.

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Restaurant owners, however, say their fixed costs like rent aren't manageable.

Landlords can apply to access the federal rent relief program, but it's not compulsory and there has been criticism the program may be too complicated. John Sinopoli told CBC Radio's The Cost of Living he's stopped paying rent; if his landlords come demanding payment, he said he's done.

Lobby groups such as the Canadian Federation of Independent Business have asked for federal programs addressing these concerns to be expanded across the board.

Restaurant closures have broader impact

If independent restaurants don't reopen, the ripple effects will extend beyond the business doors and into the broader community.

Peter Oliver is president of the neighbourhood association for Calgary's trendy Beltline community, which is home to some of the city's most popular non-chain eateries.

"A lot of the people who work in these businesses live in the area," Oliver said. "Most of the people who chose to live here do so because of these businesses. They're an integral part. You likely live in a condo or apartment and you spend a lot of time at coffee shops or going to restaurants. So that would impact the way of life here and the feel of the neighbourhood."

Written and produced by Judy Aldous, with files from James Dunne and the CBC Parliamentary Bureau.

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