Restaurants face tough fight to survive
Reopening in a way that’s safe for customers and staff the goal
Your business operated with a razor-thin profit margin before and now, just to survive, you have to figure out how to make it work with about half the customers.
That stark reality might help explain why seven in 10 Canadian restaurant and bar owners seriously doubt that their businesses will survive the next three months.
Of course, enduring an 80 per cent or worse drop in sales over the past 10 weeks, and dealing with a landlord who doesn’t want to hear it, and has no interest in the rent relief program that could help keep you afloat, only serves to cloud an already gloomy outlook.
The COVID-19 pandemic and the restrictions governments imposed to contain it, sent almost every sector of the economy into a tailspin. But it’s hard to imagine one that’s been hit harder, or faces a tougher climb back, than the food and beverage sector – bars and restaurants.
In Nova Scotia, bars have been closed and restaurants reduced to take-out and delivery service since March 19.
They will likely get the green light to reopen sometime in June, and those that do will be very different from the places that closed just a couple of months back.
Luc Erjavec knows the sector as well as anyone could. He’s been the public voice, chief lobbyist and overall champion for Nova Scotia’s restaurants and bars since the mid-1990s.
Today, as the vice-president (Atlantic) of Restaurants Canada – the outfit formerly known as the Canadian Restaurant and Foodservice Association – Erjavec is covering more ground. Where once he’d regale you with the exploits of a restauranteur in Dartmouth, he’s as likely now to tell you about an eatery you ought to visit in Moncton, Summerside or Cape Breton.
I tracked him down to get his take on the process Nova Scotia’s government designed to get businesses ready to reopen in a world turned upside down by the risk, and the fear, of the coronavirus.
Erjavec’s been dealing with governments on matters important to the province’s restaurants and bars for almost 25 years, so a little backand-forth with occupational health and safety and public health officials fazed him not at all. The government and the industry have a shared objective. They both want the establishments to reopen in a way that’s safe for customers and staff.
Physical distancing is key. In bars and restaurants that means two-metres between tables, which in virtually every establishment means fewer tables, ergo, fewer customers. There’s likely to be some masks around, too, but apparently that’s something we’re going to have to get used to generally.
But when Erjavec, off the top of his head, starts reeling off great big numbers, I began to understand the magnitude of the wreckage that could lie ahead.
In Nova Scotia alone there were – pre-COVID – more than 2,200 “establishments” in the food and drink business. Collectively they employed 39,000 Nova Scotians. In March, 24,500 of those jobs disappeared.
Last year, the sector recorded $2.1 billion in sales in Nova Scotia, and more than 30 per cent of those dollars paid somebody’s wages. The best-case scenario for 2020 is sales in the neighbourhood of $1.3 billion.
And as they get ready to reopen, only about one in three of those businesses has a reasonable degree of confidence that it will make it.
Restaurants Canada has developed three scenarios to try to give its 30,000-plus members nation-wide a sense of what the future may look like.
The best case scenario is a year-over-year decline in sales of about 25 per cent.
This assumes that pent-up demand will boost consumer spending at restaurants fairly quickly once restrictions are lifted.
The more pessimistic outlook has spending remaining weak over the remainder of 2020 and into 2021 due to the overall economic downturn and the lingering effects from COVID-19. That would play out as a 50 per cent reduction in year-over-year restaurant sales.
The most-likely scenario is somewhere in between. Consumers will remain somewhat apprehensive about returning to restaurants and discretionary spending will be restrained.
This most-likely scenario would result in a decline in sales in the 38 per cent range.
No matter how you slice it, restaurants have a rough ride ahead.
So, if you want your favourite eatery or watering hole to be around, there’s only one way you can help make it happen. Once they’re open, you need to go see them and spend some money.