Closures

by David Klemt David Klemt No Comments

Significant, Permanent Restaurant Closures Expected to Rock Canada Unless Situation Improves

Significant, Permanent Restaurant Closures Expected to Rock Canada Unless Situation Improves

by David Klemt

Industry surveys continue to reveal how dire the situation is for operators.

On December 8, Restaurants Canada, a non-profit that represents and advocates for the Great White North’s restaurant industry, shared the results of a survey they had conducted between November 26 and December 4. A total of 511 surveys representing 3,000 restaurants were completed.

According to Restaurants Canada, the nation’s foodservice industry consists of 97,500 establishments ranging from QSRs to bars and full-service venues.

More than eight out of ten survey respondents answered that they are either barely staying afloat or are operating at a loss. Drilling deeper, significantly more restaurants are operating at a loss—65 percent of survey respondents fall into this category. Just 19 percent of restaurants represented by survey respondents are able to break even.

That’s 2,400 restaurants of 3,000 struggling to survive, and 78,000 restaurants out of 97,500, assuming the survey sample size accurately represents the overall industry in Canada.

To understand the long-term effects of government-mandated restrictions and shutdowns, one has only to digest another startling statistic: Restaurants operating in the red aren’t expecting to return to profitability for a minimum of 12 months.

Under optimal conditions, the average Canadian restaurant operates on razor-thin margins. Per Restaurants Canada, restaurants keep just five percent of every $10 in sales on average, or 50 cents. The industry is Canada’s fourth-largest employer (it’s number five in the United States, for comparison), accounting for 1.2 million jobs, 58 percent of which are held by women. Over thirty percent of owners, operators and staff belong to a visible minority, further illustrating how important restaurants are to diversity and the economy; half of all restaurants in Canada are operated by immigrants. Just like in the America, restaurants are the first employer for most Canadians.

The industry is crucial to Canada, but this vital resource is under serious threat. One of those threats comes from lawmakers whose restrictions are making it much more difficult for operators to wring any profits out already miniscule margins. Much like the situation afflicting the industry in the United States, the situation is going to get worse in short order without government relief.

Restrictions are simply nails in coffins unless they’re accompanied by relief.

“Our members are seeking a new year’s resolution from government, not only to support their survival but our industry’s vital role building back a stronger, more resilient Canada,” said  Todd Barclay, president and CEO of Restaurants Canada. “Restaurants Canada is calling for a national working group to pave the way for the foodservice sector’s revival, building on the commitment in the federal government’s 2020 Fall Economic Statement to provide targeted, sector-specific support to restaurants and other hardest hit businesses.”

That national working group, according to Restaurants Canada, should focus on providing businesses being affected by government-mandated restrictions with “sufficient, efficient and effective aid”; developing campaigns that make it clear to Canadians that restaurants are capable of safely and reliably providing safe meals; promoting delivery and takeout as a viable way for the public to support restaurants; connecting with operators to understand the industry’s needs and pain points to ensure they’re in as strong a position as possible when entering the post-pandemic economy.

The next six months are crucial to the survival of Canadian restaurants. If things don’t improve, should the government not address the industry’s situation and provide relief, 48 percent of single-unit operators surveyed by Restaurants Canada indicated they expect to close within six months. That number jumps to 56 percent for multi-unit operators, who expect to close at least one of their locations (also within six months).

Restaurants Canada is asking for anyone who supports the formation of a dedicated national working group to contact their Member of Parliament via this link.

Photo by Marcus Urbenz on Unsplash

by David Klemt David Klemt No Comments

National Restaurant Association Shares Startling Statistics

National Restaurant Association Shares Startling Statistics

by David Klemt

An email sent out by the National Restaurant Association yesterday included statistics about the state of restaurants in the United States.

The revelations are breathtakingly disturbing.

While Congress “has been trapped in a political tug-of-war,” the reality for restaurants has only gotten bleaker.

According to the NRA, their most recent survey found that 110,000 restaurants have closed since Covid-19 first dug its infected claws into the United States. That’s an increase of 10,000 closures since the NRA’s last survey, the results of which were released back in September.

Many people outside of the industry are likely under the impression these closures are the result of inexperienced owners failing to adapt. A second NRA statistic dispels that misconception.

Sadly, the average age of the restaurants that have been closing is 16 years old. Sixteen percent had been open for more than three decades.

These closures aren’t the result of inexperience, they’re largely the byproduct of mandated shutdowns—repeated, in some markets—and restrictions handed down by officials who don’t understand the business.

Unfortunately, there’s not much reason to be optimistic that these closures are temporary. The majority of survey respondents who have closed their restaurants, 52 percent, said they won’t return.

The NRA is strongly encouraging everyone to let Congress know that enough is enough—they must make real progress to help the industry.

Please visit RestaurantsAct.com, click the button to email your lawmakers, and share that link with family, friends and industry peers. Don’t let Congress leave for the year without making your voice heard and telling them to pass relief for restaurants and bars.

If our elected officials don’t act fast, things will only get worse.

Image by Wokandapix from Pixabay

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