A survey released by food service industry group Restaurants Canada paints a sobering picture of the state of the Canadian restaurant industry amid the pandemic.
According to the survey, which polled close to 1,000 food service operators across the country, one out of every two independent restaurants does not expect to survive over the next three months without intervention. Additionally, 75 per cent of survey respondents said they are either very or extremely concerned about their current level of debt.
Although the Canadian government has introduced significant relief measures since the COVID-19 outbreak, restaurant advocacy groups like SaveHospitalityCA have pointed out that these funds do not adequately address the unique needs of restaurateurs, who are grappling with different kinds of operating costs and challenges compared to other small business owners.
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Over three-quarters of respondents in the Restaurants Canada survey identified rent as a main source of debt for their operations. The Canada Emergency Commercial Rent Assistance Program (CECRA) for small businesses, which was announced last Friday, offers possible hope.
Although it’s a step in the right direction, critics, including the NDP Party, have pointed out issues with the program. Most concerningly is that CECRA relies on landlords to apply for the relief, rather than the businesses that are struggling to pay rent. It’s difficult to yet determine if the program is enough to provide the meaningful relief that restaurant owners need right now.
Restaurants Canada stresses the importance of sustained support for restaurant operators over the coming months. As part of the survey, the group is recommending “continuing rent relief measures until businesses have returned to a fixed percentage of pre-COVID-19 revenues,” giving restaurants time to rebound as consumer spending picks up. CECRA is currently set to run until June.
South of the border, some US restaurant owners are beginning to pressure insurance companies, rather than the government, to provide the financial support needed to weather the COVID crisis.
A new advocacy group backed by a group of industry heavyweights that includes chefs Wolfgang Puck and Daniel Boulud is lobbying for restaurant operators who have paid premiums for business interruption insurance and think they should be paid out as a result of the pandemic.
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Business interruption insurance typically covers profits lost as a result of property damage, such as a flood or a fire. Insurance companies have therefore argued that business interruptions caused by coronavirus are not covered.
Numerous restaurant operators are beginning to file suits against insurance companies in the US, and the movement may even be gaining a hold in Canada. Merchant Law, a British Columbia-based law firm, has filed a class action lawsuit against over a dozen top Canadian insurers for breach of contract over their refusal to pay business interruption claims related to the COVID-19 outbreak.
Whether the support comes through fulfilled insurance claims or government relief funds, it appears the restaurant industry still needs more significant interventions to survive the pandemic.