Recent increased lockdown measures and COVID-19 restrictions across different provinces will have a devastating impact on Canadian businesses, according to many experts.
And there is growing anger and frustration as many businesses hang by a thread with the threat of closure becoming an increasing reality.
On Tuesday, the Alberta government announced new lockdown measures and restrictions and on Wednesday Ontario Premier Doug Ford announced a province-wide stay-at-home order for the next four weeks.
“It’s going to be even greater because it will affect all retailers of all sizes. Throughout the pandemic we managed different restrictions and lockdowns and our focus was very much, and continues to be, on our smaller retailers, but as restrictions and lockdowns increase this is now having a major impact on mid-size retailers and large speciality chains because the bulk of their assets — the brick and mortar assets — are in those provinces where there are now much tougher restrictions,” said Brisebois, adding that for many mid size stores it’s more expensive to open than to close at such low capacity limits.
“This is in fact going to be affecting a larger number of retailers and we are also absolutely concerned now that the unemployment numbers will increase and that many retail employees will not be called back. In Ontario, if the lockdown is for another four weeks, there’s no runway left and the (support) programs that are currently in place unfortunately do not reflect the current reality. A lot of them have ceilings and they are not basically reflecting the impact this is having on retailers of different sizes.
“We’re going to be calling on the provincial governments and the federal government to seriously look at the expansion of a forgivable loan program at low interest and that is going to be key if they don’t want to see huge unemployment numbers in the service sector. Retail is so fundamental to the health of other sectors within the chain that if that breaks it won’t be a crack in the dam, the dam will go and the dam will take everybody with them. This is serious.”
Daniel Carman, VP of Over the Rainbow Jeans, a family-owned boutique clothing store in Toronto which has been operating now for 46 years, said the retailer is very disappointed and concerned by the government’s decision to invoke another retail-focused lockdown that continues to unjustly target small businesses.
“Over the Rainbow has been an important business to thousands of customers and employees over the past 46 years. The strength and resilience of our staff has allowed us to successfully maintain a safe, healthy, COVID-free shopping environment during all our open periods. We are prepared and will continue to pivot, innovate, and motivate for the sake of our community,” said Carman, who is also a board member with the Bloor-Yorkville Business Improvement Area.
“The government must continue to provide small business owners and workers with ongoing mental and financial support. The government needs to clearly communicate to us in a manner we can truly understand and properly prepare for the tremendous sacrifices they are asking us all to make again. We all agree on the problem; we don’t understand or agree with the solutions.”
He said one out of 10 restaurants have already closed permanently in Canada with the exception of Atlantic Canada.
“But eight out of 10 restaurants are losing money or barely breaking even,” said Bourbeau.
“What is extremely important for us is the federal government support — rent subsidy and wage subsidy. These two elements are the ones that will help us survive. They will stay in place until June and we are asking the federal government to extend that. Otherwise lots of restaurants will close. Actually, should the situation continue for the next six months as is, half of the restaurants will close because the support that we have helps us to survive but our restaurant operators have loans over loans over loans and it will take at least 12 months for the majority of our restaurants to get back to profitability because they’re barely breaking even and losing money as we speak.”
Bourbeau said the restaurant industry in Canada typically employs 1.2 million people. But today there are still 383,000 people who are not back at work due to the pandemic or who are currently not working any hours.
“That’s huge,” he said. “Something extremely important to highlight is labour shortage. Before COVID in Canada, we were already looking for 60,000 workers. We were missing 60,000 workers in our industry. After the first wave we reopened restaurants pretty much everywhere so our workers came back. But after the second closure, many of our workers found jobs elsewhere. With the third closure, more are looking elsewhere. So once we reopen it’s going to be extremely difficult to find enough workers.”
“We’re already expecting 180,000 businesses to close their doors forever but the upper echelon of that estimate was around 250,000 and we could be looking at those numbers because it doesn’t appear that these additional lockdowns are going to be met with additional economic supports to try to help businesses make it,” he said.
The irony of current lockdowns and restrictions in many places is that businesses such as restaurants and bars and fitness studios have had few people catch the virus but are facing these measures. Meanwhile, other places such as schools, warehouses, factories, meat plants, etc., where larger numbers of people congregate — and positive cases of COVID have been spread — remain fairly unscathed from restrictions.
“What I’m hearing from businesses in retail, restaurants, gyms, hair salons, is that when you look at where the cases are coming from the data shows that it’s coming from large congregate work settings not small, little businesses,” said Kelly. “So the question that many are asking me is are we not locking down the wrong things?
“We’re locking down the little flower shop that may have five customers in an entire day and yet the Amazon warehouse is left wide open and in fact more volume has shifted their way as we lock down independent retail . . . That’s been rage inducing for small businesses.
“This is devastating. How businesses can be expected to survive when lockdowns are a semi-permanent policy as they are in Ontario is anyone’s guess.”
According to the CFIB, Toronto is the lockdown capital of North America. As of Wednesday, businesses in several sectors have been locked down for more than 300 days since the pandemic began:
- Indoor restaurant dining: 306 days
- Gyms: 299 days
- Hair/nail salons: 227 days
- Retail : 161 days.
Alla Drigola, Director, Parliamentary Affairs and SME Policy for the Canadian Chamber of Commerce, said businesses have had to continuously be ready to react to constantly changing restrictions.
“This has been an added challenge, particularly for small businesses and especially those in the hardest hit sectors like restaurants. Businesses make plans and decisions based on the information that is provided to them — decisions like staffing, ordering goods, and services offered to customers. When governments suddenly change these plans, businesses and the entire economy suffers. This is particularly true in Ontario, where constantly-shifting restrictions are having a severe and costly impact particularly on the food service sector who are told you can open your patios one day, and be ordered to shift exclusively to take out and delivery the next,” said Drigola.
“Businesses are at a breaking point. In the most recent Canadian Survey on Business Conditions released in March 2021, 42 percent of businesses with less than 20 employees indicated that they cannot take on more debt and 29 percent of businesses with 20-99 employees indicated they cannot take on more debt. 50 percent of all businesses with less than 100 employees did not know how much longer they could continue to operate before closing their doors. These are serious numbers, and we need to ensure that we continue to support these businesses while COVID restrictions remain in place.”
She said the most important thing that the government can do today is to release a plan. Businesses need certainty, they need to know what metrics the government is using to make decisions, and they need to know what supports will be in place and for how long.
“To that end, the plan must include an extension of the wage and rent subsidy programs beyond their current expiry date of June 2021,” she said.
With the significant and sudden growth of COVID-19 variants of concern, governments around the country have begun to take more drastic measures to manage health care capacity, said Bruce Winder, author of RETAIL Before, During & After COVID-19 and President of Bruce Winder Retail.
“One can almost feel the panic and desperation in politicians’ voices as they reverse course on more moderate measures launched just days before. Health care professionals have made themselves heard and have essentially forced the hand of leaders to shut down the economy again,” he said.
“The impact to retail will be significant. Non-essential retail will feel the biggest impact as stay-at-home orders are administered. Even essential retailers may face more severe limits on the sale of non-essential items within their stores. E-commerce will again become a lifeline for many consumers and retailers as home delivery and curbside pickup become the main channel of distribution.
“The net effect is that cashflow will dry up for many retailers and those who are staying in business through government subsidies will slide further into debt. This will exacerbate the difficulty of remaining operational for these businesses once government assistance ends and loans must be repaid. One can argue that there have been permanent changes to retail as a result of the pandemic and that pre-COVID-19 financial performance may not reflect the new normal once this nightmare eventually ends. This will make repayment even more difficult and will undermine further investment to innovate as much-needed capital expenditure is used to pay interest. Government may be forced to increase the mix of grant versus loan in support packages as a result.”
Michael Kehoe, Broker/Owner of Fairfield Commercial Real Estate in Calgary, said Canada is a provincial patchwork of varying levels of dining restrictions but overall, the situation is serious for an industry that has faced significant headwinds over the past year.
“New government mandated restriction measures and in some cases outright closure of in-room dining are having a negative ripple effect across the supply chains that service restaurants right down to restaurant employees and their families,” he said. “The major question facing the restaurant industry is, ‘What happens to restaurants with the additional/continued lockdown measures combined with fewer percentage rent arrangements/landlord rent concessions and the end of government programs like the wage subsidy?’ The restaurant industry could be headed for an even bigger shake out later this year.
“Restaurants are always changing and evolving, and we have seen 10 years of change in the past 12 months in this time of accelerated disruption. Many restaurateurs and their landlords are struggling to cope with these changes and an uncertain future that will be either terrifying or exciting for the foodservice industry in Canada. Restaurateurs are creative entrepreneurs and always evolving with new concepts and teams that inspire the industry with new ideas and innovative possibilities. 2021 will see restaurants continue to close and new ones will open. The transformation of the foodservice industry will continue as it enters a new era to better serve consumers in the markets where they are situated. This sector of the economy was built on relationships and the major adjustment in this intense time of change and unpredictability will be centred around the reorganization of relationships with restaurant suppliers and landlords and especially the relationship with the customer.”