Alberta restaurants in need of long-term relief

Mark von Schellwitz says subsidies can’t simply drop to zero all at once.

Restaurants and other food-service businesses are the third-largest source of private-sector jobs in Alberta. Collectively, the industry employs 150,000 people.

At least this was the case before COVID-19 led to as many as 95,000 food-service workers across the province losing their jobs or having their hours cut down to zero by April. Not only was the restaurant industry among the first and hardest hit by the pandemic, the sector will be among the slowest to return to profitability: Six of 10 Canadian food-service businesses are still operating at a loss, even as jurisdictions across the country are moving forward with reopening plans.

With the average restaurant typically needing about a third of its operating budget just to cover labour costs, restaurateurs understandably breathed a sigh of relief on May 15, when Prime Minister Justin Trudeau announced that the federal government would be extending the Canada Emergency Wage Subsidy (CEWS) program to Aug. 29.

A month since the announcement, however, it’s become clear that it’s going to take more than a simple extension of this program to help restaurants bring more Albertans back to work. When initially introduced, the CEWS program was to run for 12 weeks, retroactive to March 15, limiting employers to only being able to benefit from the subsidy until June 6.

The extension announcement gave hope to many restaurant operators who were not yet ready to reopen that this assistance might still be available once they’re able to use it. The announcement was also welcomed by establishments that have remained open since emergency restrictions were first imposed, as most restaurants that have continued to operate take-out and delivery services have done so at a loss.

But after months of significantly reduced revenue, or none at all, and now facing months of operating at reduced capacity, this is only the beginning of what will be a long and difficult road to recovery for Alberta’s restaurants. Given this reality, they need continued government support for the long term, not just until an arbitrary end date.

The wage subsidy should continue to be available to businesses as needed, to keep them from falling off cliffs when the assistance they’re receiving with payroll suddenly drops from 75 per cent to zero. Instead, a smooth ramp of support that reduces as a restaurant gets closer to manageable levels of revenue variance would be the best way to extend the program.

The requirement to demonstrate a 30-per-cent decline in revenue should also be scaled to remove any concern that increasing sales could result in losing access to the subsidy. This would help restaurants hang onto their staff while they’re still working on generating enough revenue to no longer need government support.

The wage subsidy already has helped Alberta’s restaurant industry recover more than 7,000 jobs lost during the pandemic. But at least 70,000 people previously employed in the food-service sector were still out of work across the province in May.

Reforming the wage subsidy will give restaurants greater capacity to bring more of these Albertans back to work.

Mark von Schellwitz is vice-president, Western

Canada, at Restaurants Canada, a national, not-for-profit association advancing the potential of Canada’s food-service industry.

This is only the beginning of what will be a long and difficult road.