So far, up to 25 % of restaurants in the country have now closed for the season and perhaps for good. The Canadian Chamber of Commerce expects 60 % of restaurants to close permanently by November. Even if such a forecast may be a little excessive, fear of failure for many establishments is surging.
According to Statistics Canada and other reports, revenues across the industry are at about 65 % of what they were pre-COVID. Numbers are showing how resilient some of our operators are. Many have found ways to bring some great innovative food to our doors in lieu of just waiting for us to show up.
Since June, though, many of us have showed up, but the Fall is now upon us. In other words, patio season is almost over this year in many parts of the country. Most would have noticed how patios expanded throughout our towns and cities. Cities allowed for more flexibility, including parking lots, sidewalks, and streets. Chances are, in weeks to come, we will see more patio heaters keeping patrons warm as operators try to extend the busy season the best they can. Unfortunately, that can only go so far in Canada.
Many of us will have noticed how menus are offering fewer choices while prices have gone up in order to help operators make a half-empty restaurant profitable, or close to it. We are clearly seeing signs of a very weakened industry. In fact, over the last few months, many meals served in the industry were actually “sponsored” by Sysco Foods or Gordon Food Services, major hospitality suppliers. Many restaurants are taking 90 to 120 days to pay bills. That’s four months, a sign credit ratings are skydiving. At some point, vendors will pull the trigger and more will close. Based on some information received by credit bureaus, approximately two out of every five meals are currently paid within 90 days. Financial pressures are felt across the board.
Fear of COVID-19 is certainly one factor keeping people away from the industry. According to a survey conducted in August, more than half of Canadians are planning to return to restaurants after a second wave. The economy itself will also be problematic. Many people’s professional situations have changed since the start of COVID-19. Recent labour data shows that the Canadian economy is still a million jobs short of February statistics, prior to COVID-19. However, the scariest statistic has to do with telecommuting. Almost a quarter of Canadians are currently working for an employer who is considering allowing more of their staff to work from home after the pandemic. We are already seeing how this shift can be devastating to downtown cores across the country. People are not coming into work as they prefer to stay home and when we are home behaviour towards food is very different.
Before the pandemic, approximately 38 % of our food budget was dedicated to food consumed outside the home. We are likely at 25 % right now, if not a little less. The bulk of our money is spent at the grocery store to get us busy in our own kitchens. And chances are, we are not going back to 38 % any time soon. It will take years, not just months for things to return to ‘normal.’ Ottawa’s reluctance and clear discomfort to use the hospitality industry as a means to get our economy back on a recovery path will only continue. By using restaurants and hotels as bait, incentivized consumers will buy more than just a meal or hotel stay. They will buy clothing, purchase furniture, and use more services to boost the overall economy. The best way to get an economy going again is to get to Canadians’ wallets by way of their stomachs. It’s as simple as that.
New Brunswick is helping its hospitality industry recover by providing an incentive to its citizens. The Explore NB Travel Incentive program was created in response to the COVID-19 pandemic to stimulate the tourism industry. It allows New Brunswickers to apply for a 20 per cent rebate on eligible expenses made while taking a vacation that includes a paid overnight stay in the province between July and September. The results appear to be quite compelling. Restaurants and hotels are busy, as they should be. This is a brilliant move to help support our tourism industry; however, neither the Federal government nor other provinces have pursued this economic stimulating program. For this coming fall and harsh winter ahead, the industry needs all the help it can get.
Hospitality has always been a challenging industry to work in. In the best of times, 80 % of restaurants close within five years. The bloodbath we are currently witnessing will only continue.
Dr. Sylvain Charlebois is a professor and senior Director of the Agri-Food Analytics Lab at Dalhousie University.