A relative of mine spent close to three decades in the food services industry, first working for a well-known fast food outlet, then parlaying his experience into purchasing his own diner as a franchisee within another popular restaurant chain. In a city with a vibrant food scene, he thought he had it made.
Managing the restaurant consumed his life. He stopped seeing friends and family socially. He was dumped by his partner. He stopped exercising and hardly slept. He ultimately worked seven days a week, 16 hours a day to build his dream business and make it profitable. Aside from overseeing the day-to-day operation, he cleaned toilets, cooked meals, seated and waited on hungry patrons…essentially doing whatever it took to keep the doors open.
Despite his valiant efforts, however, within three years he was broke. A combination of a lazy business partner, bad lease, unreasonable terms by the franchise lessee, rising costs, inexperience, and other factors forced him to shutter his restaurant leaving him with nothing to show for years of hard work save for a sizeable debt, a large portion of which was owed to immediate family members.
I’m not suggesting my relative’s experience is the norm but as most folks know, operating a restaurant is not for the faint of heart. Margins are thin, labour is hard to recruit and retain, the hours are long, costs continually rise for leases, goods, products, wages, insurance and utilities, and customers’ expectations and tastes are high and fickle. Although there are countless success stories in the food services sector and plenty of establishments doing just fine thank you, there are equally as many examples of failure each year, never more so than during COVID due to restrictions imposed by government.
Restaurants were and continue to be among the hardest hit of any business as a consequence of the pandemic. Notwithstanding that many were forced to close permanently or at least temporarily between 2020 and 2022, new data compiled by Restaurants Canada comparing Q2 of this year with Q2 of 2019 (pre-pandemic) shows the extent to which the industry is still on shaky ground in British Columbia.
For example, more than half the restaurants report lower sales; 62% are seeing fewer guests; 80% of operators say profits are lower; 13% are breaking even while 32% are operating at a loss; and 56% are in debt with close to half owing between $50,000 and $100,000.
Nearly all of the restaurants that reported debt owe money to government-backed bank loans through the CEBA (Canada Emergency Business Account) program, which obligates operators to full repayment by December 31st or risk losing the forgiveness portion (thus incurring even more debt) compounded by higher interest rates come January. As you saw in last week’s TIABC newsletter, CEBA requirements are proving to be a major obstacle to recovery let alone survival for sectors such as restaurants.
Convincing government to again extend the CEBA repayment deadline by one or two years is critical for the tourism and hospitality industry. The ask is among 10 recommendations TIABC submitted this week as part of the federal consultation process to inform next year’s budget.
At the same time, a full court press is underway by our national counterparts at TIAC, provincial and territorial tourism industry associations (including TIABC), Restaurants Canada, and hundreds of other sector associations and partners to implement changes to the CEBA loan repayment terms now to avoid further hardship on struggling businesses trying to keep their heads above water. Stay tuned for how you can be part of this important endeavour in the days ahead.
Earlier this week I had dinner at a popular restaurant with sister locations all over Metro Vancouver, the Fraser Valley, Vancouver Island and the Okanagan. In speaking with the server, I was disappointed to learn that this particular outlet was closing in two weeks due to rising costs, among other reasons. Conversely, I was not surprised considering myriad obstacles restaurants face these days even though there are plenty of customers who enjoy a meal out now and again.
After seeing what my relative went through many years ago when he lost his business, I empathize with the staff, owner, suppliers, and regular customers impacted by the closure and wonder how this situation could have been avoided. As I sit here today, I believe that if changing the CEBA loan terms helps just one restaurant like the Richmond establishment I frequented for the last time this week, the collective lobbying efforts by the tourism and hospitality industry will have been worth it. After all, we simply can’t afford to see more of our favourite eateries shuttering forever because of an unwillingness to help an integral sector that is still trying to recover from severe restrictions not of their own doing.