More than a year into the lingering COVID-19 pandemic thousands of new businesses in Canada remain shut out of all federal government support programs.
The Canadian Federation of Independent Business has highlighted the fact that on May 19, 2020 Prime Minister Justin Trudeau promised to work on a potential solution for businesses that had not yet filed a tax return, such as newly created businesses, who found themselves not eligible for the wage subsidy, rent subsidy and the Canada Emergency Business Account loan program.
Dan Kelly, President and CEO of the CFIB, called it shameful that tens of thousands of businesses that began formal operations after March 2020 continue to face a gruelling stretch of new restrictions and lockdowns without any of the support available to other firms.
Dan Kelly
“There are thousands and thousands of businesses that get their start every year and typically it’s not like you decide to go into business one day and then automatically your business is set up the very next,” said Kelly. “It often takes months, sometimes years, before the business is actually operationalized. So all of those businesses that were often planned and worked on pre-pandemic and then went on stream during the pandemic just as it started or the months that followed they have by policy been excluded from all of the government support programs.
“For example, a restaurant owner contacted us. They had spent $400,000 – their entire life savings, every dollar they could borrow – to try to get a 100-seat restaurant open. It was supposed to start for April 2020. Unfortunately what happened is that the pandemic slowed down the finalization of their construction because of the lockdowns that began at the beginning of the year. They were only able to open their doors in June of 2020, serving a very limited number of people. Because they didn’t open in time, because they didn’t have a payroll account, a tax return from 2019, a business number at the appropriate date, they have been excluded, as have thousands and thousands of other businesses from accessing a single dollar from the rent subsidy, a single dollar from the wage subsidy, or a single loan dollar from the Canada Emergency Business Account. And that’s deeply unfair.
“These businesses need the support to be able to make it through. In fact, they probably deserve the support even more because they have no track record.”
Kelly said the organization has written, lobbied and talked to government “a thousand times” since the Prime Minister’s promise to fix the problem and there has been no progress whatsoever.
“I find it shameful that the Government of Canada that likes to talk about having the backs of the business community during the pandemic has completely ignored new small business owners simply because they were unlucky enough to open their doors during the worldwide pandemic,” he added.
Small business owners can now sign CFIB’s petition calling on the government to provide support to new firms.
In a letter to Deputy Prime Minister Chrystia Freeland, the CFIB has outlined the following recommendations:
Waive the requirement for an active CRA Business Number (BN) on the first day of each COVID-19 relief program or allow a business to apply for one;
As new firms are not able to determine their revenue loss compared to the same month in 2019 or January/February 2020, allow them to use provincial average revenue loss numbers by sector or determine revenue comparisons based on an average sales revenue over a few recent months, as Saskatchewan has implemented;
Allow new businesses that opened after March 1, 2020, to demonstrate a month-over-month revenue reduction when comparing a month between April 2020 and April 2021 to any month between November 2020 and April 2021; and
Allow new businesses to compare month-over-month revenues to the previous month (prior to increased restrictions).
“New businesses will be vital to Canada’s economic recovery, as they create new jobs and replace the businesses that we have lost. They face the same lockdowns as other businesses, and are often more fragile because they don’t yet have a list of loyal customers or any reserves after starting operations. We urge the federal government to deliver on the promise made a year ago and provide new businesses with the support they need,” said Kelly.
“One important group has fallen through the cracks — a group that is critical to the nation’s economic recovery and a return to higher employment and vibrancy in our downtown cores and neighbourhoods.
These are the entrepreneurs who risked their capital and started businesses during the pandemic — many not by choice but by circumstance, as they were well into building a new venture when the pandemic hit and had a financial imperative to complete the project and open their doors,” explained Vallis.
Image: Piatto Cambridge
“Canada’s newest entrepreneurs rented and renovated previously empty retail spaces, hired and trained people, and contributed to their neighbourhoods. In many cases they had strong support from the community and good sales until the second wave of lockdowns hit. Like the vast majority of Canadian businesses, they wanted to help flatten the curve, and therefore abided by all the regulations and restrictions to their operations just like everyone else.
“However, without any “previous year” sales (based on pre COVID sales commencing April 2019), they did not qualify for government assistance, primarily Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy. They were between a rock and a hard place. By complying with lockdown orders, they had no way to survive.”
Not qualifying for government assistance means Canada’s newest entrepreneurs bore the full brunt of the business interruption with no help in the form of wage or rent subsidies. With each new lockdown, more permanent closures happened, and more businesses moved closer to the verge of collapse, said Vallis.
“If these businesses are not supported, and the associated jobs are not made available to those who need them, social problems — addictions, untreated mental illness and crime — are a reliable consequence that puts a strain on our social and medical systems. And when businesses close, the buildings that housed them often remain vacant for extended periods, serving as a blight on our neighbourhoods. This becomes all the more obvious the longer the buildings are left unattended, becoming worn and sometimes vandalized due to their lack of care,” he added.
“When this happens in the downtown core, the vibrancy that many municipalities worked on for years is diminished and communities experience decline at a time when we need growth.
“These new entrepreneurs want to be part of the recovery. They represent the spirit and initiative this country needs to recover, but they need support if they are going to survive, and they need it now. If the government is truly serious about building this country back better than it was before, if it cares about the vitality and safety of our towns and cities, and if it wants to do what’s best for those among us who struggle the most, it will rectify its unbalanced treatment of small businesses and expand their assistance programs to include our newest entrepreneurs who started their businesses during the pandemic. Supporting them with CEWS and CERS will surely aid in Canada’s recovery. In doing so, it will take an important step to recovery and to getting Canadians back to the Canada they know and love.”
The COVID-19 pandemic has led to a new running boom in Canada as more people are taking their fitness activities outdoors. Retailers catering to the activity will see increased sales as a result.
A new survey of 3,961 runners by RunRepeat, a website that reviews running shoes, found that 28.76 per cent of current runners are new pandemic runners that began over the past year.
The boom in running is not surprising given the circumstances of fitness studios and gyms who have had to deal with closures throughout the past year due to public health measures.
Nick Rizzo
Nick Rizzo, Research Director of RunRepeat, said the pandemic was the perfect opportunity for people to pick up that habit.
“Before the pandemic you always had an excess of options to choose to be fit, to be healthy, to get in shape. It depended on what your goal was fitness wise. Study after study has shown that just having more options to choose from it doesn’t improve your situation, it typically just makes you more anxious, more reluctant to make a decision to take action when you have more options,” said Rizzo.
“I think the pandemic narrowed all that down. When you don’t have other options to typically go to, on top of being forced to kind of stay home for a period of time, you don’t have other things to do, it’s a perfect environment to develop a new habit. There’s less distractions. There’s less that they can take away from you so you’re more likely to be successful in developing a habit which I feel is why a significant portion of those who started running during the pandemic are still running now.
“The situation was perfect for fostering the habit and will likely lead to people sticking around with running for a long time which I see is a massive opportunity for the running industry.”
John Stanton, Founder and CEO of the Running Room, which has 100 stores across Canada, said there is a running boom taking place now as a result of the pandemic.
Image: Screen grab from RunningRoom.com
“There’s a number of factors. The isolation and the fact that every health minister is recommending outdoor exercise and to do it by yourself. So walking and running fits really well for that,” said Stanton. “What we’re seeing is a lot of runners who are my age where they might not have been running as much but with the pandemic they can’t go to the swimming pool, they can’t go to the gym, they can’t go workout, and because a lot of those fitness classes are being cancelled a lot of those runners are returning.”
Stanton said many people involved in team sports also want to maintain their fitness while their sports are on a break so they too have taken up running.
“We’re seeing a real upsurge of it and it will continue too. There’s definitely an interest in it. You’re seeing it in the neighbourhoods of Calgary and Edmonton and across Canada. You see people out. Not only do you see that runner by themselves but you see families, and they’re running and walking together. We’re seeing an uptick on selling shoes because the runner who used to run and maybe because of aging or injuries and can’t run any longer knows the benefits of getting outside and getting moving and exercising. And they’re walking in the community,” said Stanton.
“You’ve got the newbie runner that’s there and they’re there in big numbers. You’ve got the return runner who is there and decided to come back to running because they maybe gave up and took up another sport for awhile. And then you’ve got the runner who can’t run anymore but they’re walking. And you’ve got the brand new person who has seen everyone in the neighbourhood and they’re going stir crazy in the house and they’ve got to go outside and do something. So they might as well try walking or running.”
Running Room at CrossIron Mills. Photo: Jessica Finch
Key findings from the RunRepeat survey include:
These new-pandemic runners are 19.82 per cent less likely to participate in in-person races over the next 12 months;
New runners are 115.37 per cent more in favour of virtual races than pre-pandemic runners;
Motives for running are changing – physical health is the primary motivation for 72 per cent of new-pandemic runners, up 18.03 per cent from runners who began running before the pandemic;
Only 50.04 per cent of new-pandemic runners plan to participate in a race over the next 12 months in comparison to the 63.08 per cent of pre-pandemic runners;
Currently, these new-pandemic runners are 20.67 per cent less likely to participate in any form of race, in-person or virtual;
Of these new runners that are looking to participate in a race, 68.42 per cent plan to race in-person in comparison to the 85.34 per cent of pre-pandemic runners;
New runners are running for their health, all while being less likely to choose any of the other options as a primary source of motivation. Specifically, these new runners are: 34.27 per cent less likely to run for competition or achievement; 31.44 per cent less likely to run for social interaction; 14.81 per cent less likely to run for mental or emotional health; three per cent less likely to run for their confidence or self-esteem.
“Our Fitness Trends 2021 report showed that outdoor activities like running were the #1 trend in 2020 and 2021, increasing significantly over the year,” said RunRepeat. “This study shows that there has been a significant boom in running during the pandemic. The situation and circumstances that these people have taken up running are drastically different than their pre-pandemic counterparts.
“With more than a quarter of runners having begun during the pandemic, the “average runner” has changed. From their motivations to their race participation and preferences. Focusing much more on the physical health benefits of cardio and being much more highly in favour of virtual races.”
Season 3, Episode 11: Topshop to Close All Stores in Canada
This week, Craig and Lee discuss Hudson’s Bay’s plans to close all of its Topshop stores. The closure of Topshop and Topman shop-in-stores will require HBC to strategize a substantial amount of space in many of its stores.
The Weekly podcast by Retail Insider Canada is available on Apple Podcasts, Stitcher, TuneIn, Google Play, or through our dedicated RSS feed for Overcast and other podcast players.
Drop us a line at Craig@Retail-Insider.com. You can also rate us in Apple Podcasts or recommend us in Overcast to help more people discover the show!
Background Music Credit: Hard Boiled Kevin MacLeod (incompetech.com). Licensed under Creative Commons: By Attribution 3.0 License. http://creativecommons.org/licenses/by/3.0/
The Compass Restaurant Group, based out of Ontario and run by Kathryn and John Chayka, a former General Manager of the NHL’s Arizona Coyotes, has picked up 13 franchise Wendy’s restaurants in Quebec with a commitment to expand the brand in that province.
The deal also comes with a commitment to build 13 additional restaurants in Quebec by 2025 as Wendy’s seeks to double its footprint in the province.
“At Wendy’s, we see tremendous opportunity in Quebec with more than a quarter of the population living there and only three per cent of our Wendy’s Canadian restaurants. This new agreement demonstrates the strength of the brand and the faith our franchise partners have in our bright future,” said Abigail Pringle, President, International and Chief Development Officer at The Wendy’s Company, in a statement.
“Wendy’s franchise owners, like Kathryn and John Chayka, continue to play an integral role in bringing our restaurants to communities across Canada and we are thrilled with their continued commitment to Wendy’s.”
The Chayka’s became Wendy’s franchise owners in 2015 when they purchased 12 locations in southern Ontario from Wendy’s corporate. Today they have 14 locations, primarily in the Niagara region but from Fort Erie to Burlington. The company’s head office is in Timmins, ON, but the Chayka’s are based out of Niagara.
“I think Wendy’s has done a really good job growing and re-invigorating the brand. They’ve done a really good job adapting with consumers, and not only that, it’s sometimes hard for brands to be Canadian when they’re not necessarily Canadian. I think they do a really good job with the quality. We have Canadian beef. They do a great job speaking to the Canadian consumer and even more now speaking to the Millennial consumer,” said Kathryn.
The Chayka’s are known for their involvement in the community. For example, in 2020, they donated and delivered more than 1,000 meals to frontline workers in the Niagara region who were fighting the spread of COVID-19. They also offered 50 per cent off meals for employees on leave of absence and provided active employees the same discount to provide meals for their families after their shift was over.
“Community has always been an important part of our lives and our Wendy’s restaurants have been a great way for us to connect with those in the Niagara region. This expansion is an exciting opportunity for us to grow our business, bring jobs to Quebec and to provide more Wendy’s experiences to more consumers across Canada,” said Kathryn.
“I think right now the economy is really strong (in Quebec). It’s interesting because the Wendy’s brand only has 13 stores in the province but Quebec has a quarter of Canada’s population. It’s not like there’s necessarily crazy barriers to entry. We see all sorts of brands in Quebec that are also popular throughout all the provinces in Canada. Other QSR’s (quick service restaurants) even . . . Overall we thought it was a huge opportunity. We’re young and we’re hungry and we want to grow and we felt that given all the opportunities in all the provinces Quebec had the most potential.”
There are nearly 400 Wendy’s restaurants across Canada.
Pringle said Quebec is substantially underpenetrated versus the rest of the country.
“We’ve seen strong sales growth in this market and believe there is a great opportunity to unlock growth for Wendy’s in Quebec,” said Pringle.
“We know that consumers are looking for fresh, high quality, made to order food at an affordable price that they can access quickly, conveniently and safely, and Wendy’s is positioned to do just that. We also offer consumers a variety of ways to access the brand that creates convenience in their everyday lives such as delivery, mobile order, and our drive-thrus.
“At Wendy’s, our vision is to become the world’s most beloved and thriving restaurant brand. To achieve that, we are developing innovative ways to expand access to the brand and unlock explosive growth across the globe. Expanding our footprint is one of our strategic growth pillars, and we remain committed to recruiting franchisees and building relationships with partners who want to grow with us. We expect Canada to contribute to our net growth Internationally in 2021. Further, we remain confident in our plans to reach approximately 8,000 restaurants globally by 2025.”
Wendy’s was founded in 1969 by Dave Thomas in Columbus, Ohio.
The first Wendy’s restaurant in Canada opened in 1975. Today there are more than 6,800 restaurants worldwide.
Manulife Centre Blu's store in Edmonton. Photo: Blu's
Upscale Edmonton-based womenswear retailer Blu’s will open a store this year at West Edmonton Mall in Edmonton. It will be a fourth location for the storied retailer and will replace a store that recently shuttered at Edmonton’s Southgate Centre.
The West Edmonton Mall Blu’s store will be located in Phase One of the shopping centre in a 2,100 square foot second-level space most recently occupied by womenswear retailer J. Michael’s. Blu’s will be located between a Mephisto shoe store and retail Luggage Unlimited, and across from multi-brand luxury menswear retailer Harry Rosen as part of a strategic positioning. A large number of women shop at Harry Rosen for men in their life, and now women will have their own upscale place to by fashions close by.
An Edmonton Blu’s store closed several months ago at the Southgate Centre after a lease expiry. Blu’s had occupied 3,315 square feet on a small second level of the shopping centre that also houses the mall’s administration offices and an optical centre.
Blu’s will open across from Harry Rosen on the 2nd level of phase One at West Edmonton Mall. Click image above for interactive West Edmonton Mall map.
Blu’s other Edmonton storefront is located on the second level of the downtown Manulife Place retail podium which until January of 2020 also housed a Holt Renfrew store. Upscale menswear retailer Henry Singer has a store downstairs at Manulife Place which has otherwise seen most retail tenants vacate over the past three years and will see a redevelopment.
Blu's at Manulife Place
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Blu's at Manulife Place
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Blu's at Manulife Place
In Calgary, Blu’s operates two stores, including a 4,439 square foot downtown location on the third floor of Banker’s Hall, as well as a 3,890 square foot store on the second level of the Southcentre shopping centre.
Blu’s began in 1978 as a section within the Henry Singer store in downtown Edmonton. At the time, Henry Singer occupied the main floor of the Birks Building at the northeast corner of Jasper Avenue and 104 Street in a 6,000 square foot space that it leased in 1974. The opening of the Henry Singer women’s department saw coverage in the Edmonton Journal as per the newspaper clipping from Newspapers.com below.
Newspaper article from the Edmonton Journal on September 12, 1978. Image retrieved from www.newspapers.com
In 1981, Blu’s relocated to a small storefront on 104 Street near Jasper Avenue in the Standard Life building (which is now anchored by a Shoppers Drug Mart store). In 1983, John and Jennifer Leavitt purchased Blu’s from Henry Singer and in 1988, the couple moved the Blu’s store into a much larger two-level space in the new 200,000 square foot Manulife Place Phase II which is now occupied by DynaLIFE Medical Labs. Blu’s eventually moved to its current second-level space at the original Manulife Place and in 2015, the retailer was acquired by Kerry Tham and Vince Kong who joined as partners. The Manulife Place Blu’s store saw a full renovation in 2017.
Newspaper article/advertisement from the Edmonton Journal on March 15, 1988. Image retrieved from www.newspapers.com
Blu’s has been part of many Edmonton women’s wardrobes over the years, helped in part with its ‘The Investment Wardrobe’ which encourages customers to buy key pieces that can be worn in various ways depending on the occasion.
Upscale Blu’s features a range of fashions, footwear, bags and accessories from leading designers with a price-point in the ‘contemporary’ category. The retailer carries some brands not found elsewhere in Edmonton or Northern Alberta. Exclusive brands to Blu’s in Edmonton include French bag and accessory brand Longchamp as well as fashion brands such as Veronica Beard and Anne Fontaine. Other notable brands at Blu’s include Eileen Fisher, Hugo Boss, Marie Saint Pierre, Marc Cain, Smythe, Sarah Pacini, and Tiger of Sweden. Footwear styles from Stuart Weitzman, Frye, and Canadian brand Ron White are also carried in-store.
Blu’s is one of the only upscale multi-brand retailers in the Edmonton market and in downtown Edmonton, it’s the only upscale multi-brand womenswear retailer after Donovan’s shut down in 2009. Downtown Edmonton retail has been devastated due in part to the pandemic with mass vacancies made worse with Hudson’s Bay’s plans to shut its Edmonton City Centre store on June 3rd. West Edmonton Mall is home to La Maison Simons which currently has the most extensive assortment of women’s designer brands in the shopping centre.
Blu's Southcentre Mall
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Exterior Blu's Southcentre Mall
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Blu's Southcentre Mall (Image: Blu's)
Blu's Southcentre Mall
Upscale retail in Edmonton is clearly shifting to West Edmonton Mall — it’s a movement that has been progressing for the past eight years when Tiffany & Co. opened a store at the centre. Things ramped up when in the summer of 2019, French luxury brand Louis Vuitton opened a store at West Edmonton Mall, followed by luxury brand Saint Laurent in December 2020 and last month, a 5,000 square foot Gucci store opened between the two other luxury brands. The loss of Holt Renfrew in downtown Edmonton was a blow to the area and its closure was only about two months before the pandemic shut retail across the country temporarily. Downtown Edmonton continues to struggle as many work from home because of the pandemic, and it’s unclear what the future will hold in terms of people returning downtown to shop.
Sephora at CF Richmond Centre. Photo: Geetanjali Sharma
Multi-brand beauty retailer Sephora announced this week that its Canadian division would dedicate 25% of its brand offering to BIPOC-owned brands by 2026. It’s an additional 10% to The Fifteen Percent Pledge which began in the U.S. last year.
Sephora Canada says that its pledge is driven in part by the fact that 22.3% of Canadians identify as visible minorities, which the company says makes visible representation within its brand offering more important than ever in this country. Sephora says that about 12% of its brands are currently owned by those who are Black, Indigenous or otherwise deemed a person of colour.
By 2022, Sephora says its goal is for 15% of its beauty brands to be BIPOC-owned. It’s likely that the retailer will meet that goal. The company says that it has an ongoing action plan in place for increasing BIPOC representation in its brands including supporting BIPOC-owned brands in achieving Canadian compliancy, which has already played a crucial role in enabling expansion into Canada as well as aiding Sephora’s newest Accelerate brands with the resources and information they need to expand beyond the United States.
Sephora Canada’s localized commitment to the Fifteen Percent Pledge is part of the retailer’s ongoing efforts of creating an inviting beauty experience that reflects its longstanding company values of championing diversity, inclusivity, and inspiring fearlessness. (CNW Group/Sephora)
The Fifteen Percent Pledge is a non-profit organization based in the United States. It advocates for the equitable and intentional distribution of wealth and opportunity for Black-owned businesses and people in the workforce, as well as urges retailers to commit at least 15% of their shelf-space to Black-owned businesses.
In June of last year, Sephora was the first major retailer to take the pledge which included evolving its 2021 Accelerate incubator programming to be dedicated exclusively to people of colour. Shortly after launching in the United States, The Fifteen Percent Pledge team’s mission extended into Canada in support of Black, Indigenous, and People of Colour (BIPOC)-owned businesses and BIPOC people in the workforce.
“We are proud to solidify our goal of reaching 25 per cent BIPOC-owned brands by 2026 as part of our new localized Fifteen Percent Pledge commitment,” said Jane Nugent, Sephora Canada’s Senior Vice President of Merchandising. “Ensuring greater representation within our prestige beauty brand offering that is reflective of Canada’s rich diversity is central to our mission of creating a more inclusive retail experience and sense of belonging for all.”
Sephora on Bloor Street in Toronto. Photo: Craig Patterson
“As we approach the one year anniversary of the racial justice protests last summer, we could not be more thrilled that Sephora Canada is taking the Pledge and partnering with us to drive equity across retail,” said Aurora James, founder of the Fifteen Percent Pledge.
“Being a proud Canadian, it’s exciting to see the Pledge continue to expand beyond the U.S. and have Sephora Canada be our newest partnership in my home country. Their commitment to increase their shelf space to 25 per cent BlPOC-owned brands is huge, and we are looking forward to working in lockstep with them to provide support and help them achieve this goal,” she went on to say.
Over the past year, Sephora Canada has also established a Diversity and Inclusion Council which it says is geared towards identifying actionable solutions and galvanizing change.
Sephora is also in a major expansion mode in Canada with plans to open nearly 50 more stores over the next three years, expanding the retailer’s footprint by about 60%.
Sephora at CrossIron Mills. Photo: Jessica Finch
Last week we reported that Canadian department store chain Hudson’s Bay had also signed on to the Fifteen Percent Pledge. As of this fall, at least 15% of all new brands purchased for its stores and thebay.com will be BIPOC-owned or designed. Hudson’s Bay is the first department store in Canada to commit to the Pledge.
More businesses are expected to announce commitment to the pledge in the coming weeks as the movement continues to take hold in Canada.
While the hospitality industry faces struggles due to closures mandated because of the COVID-19 pandemic, there continues to be a large demand for people looking to buy commercial and restaurant properties.
And currently there is a lack of inventory in that area.
Government support programs have kept many businesses alive, so to speak, in the sense that they haven’t closed their doors for good.
But a day is coming in the future when support is no longer there and many opportunities will open up as a result of the mountain of debt many businesses built during the pandemic.
West Queen West – Photo by Dustin Fuhs
Mark Parmegiani
Ori Grad, Broker & Managing Director and Mark Parmegiani, Director of Commercial Sales and Leasing from CHI Real Estate Group, are hospitality business brokers who specialize in helping clients buy and sell restaurants.
Parmegiani said large spaces for night clubs and sit-down restaurants fell away during the pandemic, leasing activity went to near zero and deals fell apart, particularly in the financial district of Toronto.
“What really emerged is we had endless calls for restaurant spaces up to 1,500 square feet, direct entry into a restaurant of course, and patio spaces. So either used as a pure QSR (quick service restaurant) or a QSR with patio or a small space with patio.
Future Quick Service in the PATH – Photo by Dustin Fuhs
“That’s been kind of an ongoing trend and a hot property, especially in the suburbs but outside of the financial district. The financial district remains definitely in a lull compared to there.”
Grad said the market is starting to see some of the big real estate space come available.
“The government has stepped up big time in paying people’s rent. That’s a very important factor right now why there’s not mass vacancies all over the place. The government is paying up to 90 per cent of some businesses’ rent right now including wage subsidies,” he said.
Ori Grad
“I was really expecting last year I thought in August ‘oh man the ball’s going to drop. We were going to see mass vacancies’. But that didn’t happen. I thought it would be October/November. Now we’re in May and really while the government’s paying everybody’s rent there’s a huge lack of inventory out there right now and we have an awful lot of buyers, qualified buyers looking to buy restaurants but there’s very, very little available for sale right now.”
Many restaurants were struggling pre-COVID and the question is how are they going to fare when the doors open again.
“There are tough times ahead once the subsidies stop,” said Grad.
“We definitely expect way more inventory to come to market,” added Parmegiani. “It appears like the government is trying to push the subsidies long enough and then have other incentives and programs to reopen so that whoever is well-positioned to survive will survive and manage to squeak through with the revenues they are getting. For the rest, it really remains to be seen.
8 Scollard Street – Photo by Craig Patterson
“All of these restaurants are in buildings that are most likely owned by someone else who is the landlord and they are paying rent to. We looked at all the transactions for buildings with restaurants for the City of Toronto from 2019 to 2020 and Q1 of 2021 and it was really interesting to see a lot of buildings traded hands. It was almost 100 in 2019 but the same number of buildings traded hands in 2020 which we didn’t expect. And a lot of buildings we never expected to come to market came to market. The average price went up. The average price per square foot went up because we were seeing buildings trade on Queen Street that used to have restaurants.”
He said that from all indications the price per square foot for buildings that are under 3,000 square feet went from about $750 to over $1,000 on average in Toronto.
“It’s not that suddenly there’s a rush of bidders on these buildings and all values are rising but suddenly a lot more premium corner spots, corner buildings, they’re highly valued in commercial on Queen Street that have started selling. And you’ve never seen this come to market before because they were just too valuable and pulling in great rents and they had such high demand for them,” said Parmegiani.
Library Coffee on Queen West – Photo by Dustin Fuhs
Grad said there’s still not enough inventory out in the market.
“There’s still many more buyers out there than sellers, which also inflates the market on a supply and demand scale,” he said.
Some of the market trends in the industry include the growth of the ghost kitchen concept and the shift in desirable locations where buyers are looking at locations near condo developments and densely populated areas.
In the marketplace, CHI Real Estate offers clients a discreet listing service. It can sell a restaurant without the whole world knowing it’s for sale.
When businesses want to sell, Grad said they don’t want their staff and others to know for various reasons.
Image: CHI Real Estate Website
“What we do is very discreet. Most of the deals I do don’t hit the open market and I represent both parties because they want to keep discretion,” he said.
“It’s a service I’ve been doing since I started this – the discreet listings. Almost exclusive listings. Just more private and we bring buyers with discretion.
“The people buying buildings are buying them in great locations in areas that are the most distressed like Queen Street, down on King. They’re betting on the future. And there has been, in the background with this pandemic, there have been huge lease deals that have been executed by restaurant groups around this country. So people are betting on large developments like you see by the number of condo development applications that are still going into the city. They’re pouring in if you take a look at what’s happening right across the board. People are making large bets that we’re coming back and we’re coming back really strong.”
