How deep is too deep when adding debt to keep operating became all the more pressing for restaurants and other businesses in Toronto, Ottawa and Peel region on Friday as the Ontario government announced a set of new restrictions to tamp down a massive surge of COVID-19 cases in what has become the province’s three main hot spots.
The new measures, announced as Ontario logged a record-high 939 new cases of the virus, include closing indoor dining, theatres and gyms for at least 28 days, effective 12:01 a.m. on Saturday.
The new rules against indoor dining, coming just as the cold weather starts to sap enthusiasm for patio dining, will effectively shut off a majority of the revenue for the struggling restaurant sector and force tens of thousands of layoffs, industry advocates say.
Restaurants Canada, the main trade association for the industry, warned that the end of indoor dining will cut off roughly 80 per cent of sales for full-service restaurants. The association estimated that 33,000 restaurant employees will lose their jobs in Toronto, 12,000 in Ottawa and 14,900 in Peel Region.
“I think a lot of people who had seven months’ worth of debt accrued were looking forward to some revenue to be able to start paying that off,” spokesperson James Rilett said, adding that current projections show roughly 50 per cent of independent Canadian restaurants will fail in the coming year, without significant intervention. “Without any revenue whatsoever, it’s really going to be hard for many to survive.”
Andrew Oliver, chief executive of Oliver & Bonacini Hospitality Inc., which owns many popular restaurants including Canoe in Toronto and Alchemy in Edmonton, said the government needs to be clear about its long-term plans to help restaurants survive the entire pandemic to inject some confidence back into the shaken industry.
“We need to have a plan that goes until next summer,” he said. “It makes no sense to me that they’re putting the mental stress and strain on people. I’ve gotten dozens of calls from restaurateurs who are having panic attacks right now.”
The federal government on Friday announced a new rent relief program that would cover up to 65 per cent of rent for impacted businesses and up to 90 per cent of rent for businesses facing the new shutdown measures. The government also said a wage subsidy program will extend to December, but only covers 65 per cent of wages.
On top of the federal aid, Ontario announced $300 million in funding for businesses in the impacted areas, including relief on property taxes and utility bills. Specifics on the new funding weren’t immediately available on Friday afternoon, with the government promising more detail “in the coming days.”
At a news conference Friday, a visibly shaken Ontario Premier Doug Ford repeatedly asked people in the province to order takeout.
“I didn’t sleep last night,” he said. “I know what this will do to businesses that are already struggling.”
But takeout won’t be enough for many businesses, and they may have to take on more debt to survive.
Donna Dooher, the owner of Mildred’s Temple Kitchen in Toronto’s Liberty Village, said the total she’s willing to take on to keep her popular restaurant afloat is $100,000, which would take 18 to 24 months of strong, post-pandemic sales to pay back.
In the busy patio season this summer, with 35 per cent of her staff back to work, Dooher would sometimes think that maybe she could live with a bigger debt in order to get through the pandemic. But even in peak patio season, she was still operating at a loss and dependent on the federal wage subsidy to keep open.
“I will admit, there are days when I go home and just sit down and shake my head and say, ‘Maybe now is the time to cut the losses,’” she said. “You can’t just keep digging.”
Dooher said her plan as of Friday was to keep going, stay below that $100,000 number and make it through the winter selling takeout, pancake mix and frozen, ready-to-bake biscuits.
“We’re not close to that number yet,” she said. “We also know we’re coming into our hardest months.”
— With files from the Canadian Press
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