LEAN STREETS
Closure of small businesses amid lockdown leads to fears that some of city’s liveliest neighbourhoods will lose their distinct character
As he looks around the neighbourhood his family has been a part of since arriving from Italy in 1957, Rocco Mastrangelo Jr. sees familiar sights disappearing.
Il Gatto Nero, a longtime friendly competitor of his family’s Café Diplomatico in Little Italy, has closed. Mastrangelo fears there will be many more, estimating that up to 40 per cent of small businesses in the densely packed area known for family-run Italian stores and restaurants will close permanently because of the COVID-19 pandemic.
“What’s happening now is not sustainable,” said Mastrangelo, whose family opened Café Diplomatico in 1968.
Mastrangelo has been running the College Street restaurant for around 25 years. He said it’s been heartbreaking to see other long-standing businesses close their doors, as it’s the mix of different businesses that make this neighbourhood a destination. “It’s been horrible,” he said. Across Toronto, many neighbourhoods known for their independent, distinctive character are at risk of seeing local institutions close, businesses owners and analysts say.
The Star reached out to the city’s 83 business improvement associations through the Toronto Association of Business Improvement Areas, and focused in on regions where there were reports of long-standing family-run institutions that could be shut forever.
Mastrangelo says while many of the businesses closing were on the verge anyway — like his parents’ passion project, a video store — many others were popular restaurants and cafés just waiting for the spring and summer rush to refill their coffers.
As both a commercial tenant and a landlord, he said he doesn’t think the current conditions are sustainable. Businesses are waiting to open, and restaurants in particular are struggling, he said.
Asurvey published April 23 by Restaurants Canada found that one in two independent restaurants didn’t expect to survive the following three months without improved conditions.
Many restaurants and bars have closed across the city — the Anishinaabe restaurant Nishdish, Greektown favourite Pappas Grill and Cajun-Creole restaurant Southern Accent.
Conditions were difficult for small businesses before the pandemic, with rising property taxes and rent, Mastrangelo said. College Street was already going through a transition, with some older “mom and pop” stores starting to close, and the pandemic just accelerated that, he said.
Maria Galipo, treasurer of the Little Italy College Street BIA, said neighbourhoods like hers are being hit harder by business closures due to the pandemic. She said it’s because these destination neighbourhoods are known for small, family-owned businesses that have been around for years.
“I think there’s going to be a huge shift,” said Galipo, coowner of Sicilian Sidewalk Cafe, also on College Street, established in 1959.
In April, Galipo sent an open letter to all levels of government asking them to make sure that relief programs were available to small businesses.
“If appropriate measures are not provided to these establishments, we will forever lose the charm and character that has been such a rich and integral part of our lives,” she wrote.
Many small businesses are in sectors that were the first to be shut down, and will be among the last to reopen: restaurants, small retailers and personal services, said Ryan Mallough, director of provincial affairs for Ontario with the Canadian Federation of Independent Businesses.
Even when government aid is offered, said Mallough, small businesses have a harder time accessing it.
“There’s a huge administrative burden in accessing government money, even when the program is well designed. The Walmarts of this world have legal departments to handle these things. A small business doesn’t,” he said.
Mallough argues that small businesses collectively are just as vital to the economy as any of the major companies governments often prioritize with their aid.
But most simply don’t have as much access to capital as larger corporations, he said. “People take out mortgages on their homes to start small businesses. And they don’t have a lot of extra room financially.”
For businesses in the multiethnic York-Eglinton BIA, COVID-19 has been the second half of a devastating one-two punch that started with the Crosstown LRT construction, says Nick Alampi, the BIA’s chair.
“This has been devastating,” said Alampi, who owns Andrew’s Formals tuxedo rental shop.
Even though he’s now open, cancellations have been coming in left, right and centre, Alampi said, as the pandemic means weddings, graduations and other gatherings are put on hold.
Dominic Lim, who studies independent businesses, says small businesses cluster in particular areas partly for economic reasons, such as affordable rents and available space, but also because they’re simply going where their target market is.
“Look at Liberty Village or Queen West. Of course, there are going to be hip, independent places in those neighbourhoods,” said Lim, assistant professor of entrepreneurship at Western University’s Ivey School of Business.
In York-Eglinton, the vast majority of businesses are small, independent operations, many of them catering to the Caribbean and Filipino communities, Alampi said. There are also plenty of small Italian and Portuguese businesses.
“There are so many unique little spots with stuff you just can’t find anywhere else,” Alampi said.
Many small business owners in the area had already been struggling to survive the Crosstown construction, which has now been extended until 2022. Now, Alampi said, with COVID-19, some are simply closing up shop for good. Alampi said the York-Eglinton BIA has dropped to just 100 active members from 150 about two years ago. Some small business owners in the area have tried to take out second mortgages on their homes, Alampi said. But banks have turned them down, himself included, citing the lack of revenue.
In the Church-Wellesley BIA, the heart of Toronto’s LGBTQ community, the loss of some beloved institutions is deeply felt. For example, Club 120 and its counterpart Diner 120, which are further south on Church Street, had to close their doors, after providing a favourite spot for what co-owner Todd Klinck called the “extreme diversity” of Toronto’s various LGBTQ communities. Other areas of Toronto haven’t seen high rates of closure just yet, but anticipate them in the near future if things don’t change.
According to Philip Kocev, treasurer of the Broadview Danforth BIA, only four businesses in the area have permanently shuttered so far. But he worries the number will grow.
“We are fearful that as the state of emergency continues to get extended ... this number will quickly increase,” he said in an email.
Asurvey of the BIA’s businesses released Thursday showed that 72 per cent of them could not make all of June’s rent; 42 per cent did not qualify for the federal wage subsidy; 28 per cent did not qualify for the federal $40,000 loan; and 36 per cent did not qualify for rent assistance.
Mary Fragedakis, executive director of the Greektown Danforth BIA, said many small businesses are falling through the cracks of the government programs. “The impacts have been devastating for small businesses,” she said.
While she estimates less than 10 per cent of the businesses in her BIA have permanently closed so far, she too thinks that the longer this goes on without widely available government support, the more businesses will have to make that decision.
“The longer this lasts, the more difficult this becomes.”
“There are so many unique little spots with stuff you just can’t find anywhere else.”
NICK ALAMPI BIA CHAIR
With files from Josh Rubin